GBPUSD advances towards 1.1645, after hitting a two-month high around 1.1685

• British pound gets a respite and rises more than 300 points after the US inflation data.
• The US October CPI missed expectations, signaling that inflation is easing, albeit more slowly than the Fed’s projections.
• The Fed’s Daly expects the Federal Funds Rate (FFR) to peak at around 4.9%.

The GBP spikes towards the 100-day EMA on the back of the US CPI, which weighed on the dollar amid speculation that the Federal Reserve would tighten monetary policy at a slower pace than the rate hikes. 75 basis points. At the time of writing this report, the GBPUSD it trades at 1.1647.

GBPUSD advanced strongly after US inflation report, which was lower than expected

Thursday’s report on the US Consumer Price Index (CPI) for the month of October showed that inflation is finally easing a bit. The headline CPI came in at 7.7% yoy, below estimates of 7.9%, while the core CPI, which excludes volatile items such as food and energy, did the same, coming in at 6.3% yoy, below of expectations of 6.5%. That said, the US dollar weakened across the board, while US Treasury yields fell, down 24 basis points at 10-year 3,857%.

The dollar index, which measures the value of the dollar against a basket of six currencies, fell 1.91% to 108.332, giving GBPUSD a boost, which rebounded 300 points after hitting a daily low of 1.1345.

At the same time, the US labor market updated jobless claims figures, which were overshadowed by the US inflation report. Initial jobless claims last week rose by 225,000 against estimates of 220,000. Despite last week’s nonfarm payrolls report adding more jobs than economists expected, the unemployment rate rose to 3.7%, meaning the labor market remains tight but is beginning to feel the pinch. impact of restrictive policy.

Aside from this, Fed officials made statements following the release of the US economic data. Harker of the Philadelphia Fed said inflation remains too high, adding rate hikes below 75 basis points “remain significant.” He said future policy decisions will depend on the data. Dallas Fed President Logan said October’s CPI data is welcome, but there is a long way to go. He added that the cooling process of the economy has only just begun.

San Francisco Fed President Mary Daly said October’s CPI went well and is just one “example of encouraging data.” She favors a slow and steady rise in the Federal Funds Rate (FFR), expecting it to peak at around 4.9%.

As for the UK, UK GDP for the third quarter is due to be released on Friday, which should shed some light on the state of the UK economy. Late next week, the UK tax return announced on November 17 would be the next catalyst for GBPUSD traders.

GBPUSD Key Technical Levels