GBP / USD retraces below 1.3850 after hitting monthly highs above 1.3900

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  • The US dollar regains ground after a sharp drop in US data.
  • Inflation slowed in August in the US but remains high.
  • GBP / USD fails to stay above 1.3900, back to the recent range.

The GBP/USD It failed to stay above key technical levels and fell back amid a recovery in the US dollar. The pound peaked after the start of the US session at 1.3913, the highest level in a month, and then weakened. It erased most of its daily gains and is slightly below 1.3850.

US inflation slows

Data released earlier on Tuesday showed an improvement in the UK job market. The latest report was the US CPI for August which showed a 0.3% rise in the headline, down from the expected 0.4%.

“Consumer price inflation in the United States decelerated in August, reflecting a moderation in the critical reopening points of the economy, where prices had been increasing. Elsewhere, inflationary pressures are widening while high inflation expectations risk keeping the CPI well above target for much longer than the Federal Reserve currently anticipates, ”ING analysts explained.

The US dollar initially fell across the board amid a sharp drop in US yields, but then regained ground, erasing post-CPI losses, even as yields held lower. The 10-year yield reached 1.35% and then fell to 1.26%. The move weighed on the dollar and boosted gold.

Technical levels

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