- GBP / USD consolidates its recent strong gains to near three-month highs.
- Pessimistic expectations from the Fed continue to weigh on the USD and support the upward movement of the pair.
- A stronger UK CPI benefits sterling further and offers some support.
- Investors now seem reluctant to open aggressive positions ahead of the FOMC minutes.
The pair GBP/USD extends your side consolidation price action and remains trapped within a range just below the 1.4200 level after the release of UK inflation figures.
Following a modest pullback the day before from nearly three-month highs, the pair regained some traction on Wednesday. amid prevailing bearish sentiment around the US dollar. Expectations that the Fed will keep interest rates low for a longer period have continued to act as a headwind for the dollar and have offered some support to the GBP / USD pair.
On the other hand, sterling has remained supported by optimistic prospects for UK economic recovery after the pandemic, reinforced by the gradual relaxation of lockdown restrictions. Optimism has been seen driven by the latest UK consumer inflation figures, which showed headline CPI up 1.5% yoy in April compared to 1.4% expected and 0.7% previously.
Having said that, a softer risk tone, as shown by a modest pullback in equity markets, has helped limit the decline in the US dollar as a safe haven and could limit GBP / USD gains. Investors also seem reluctant to open aggressive bullish positions, preferring to wait on the sidelines before the release of the minutes of the FOMC meeting on Wednesday.
Even from a technical perspective, the strong positive move the day before stopped near a resistance marked by the upper end of an uptrend channel over a month. This makes it prudent to wait for a solid follow-up to buying before positioning for any further bullish movement towards the test of the yearly highs, around the 1.4235 region touched in February.
GBP / USD technical levels
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