- GBPUSD recovers strongly after the release of the US CPI report, softer than expected.
- US headline CPI slowed to 7.7% and core CPI fell to 6.3% in October.
- The data raises bets on less aggressive Fed rate hikes and weighs on the dollar.
The pair GBPUSD receives aggressive offers during the first hours of the American session and recovers beyond the 1.1550 area in reaction to softer US consumer inflation figures.
The US Bureau of Labor Statistics reported that the headline CPI rose 0.4% in October and the annual rate eased to 7.7% from 8.2% in September, both disappointing expectations. Other data revealed that core inflation, which excludes food and energy prices, slowed more than expected to 6.3% annually from 6.6% previously.
The data added to speculation that the Federal Reserve will slow the pace of its policy tightening and dragged the US dollar to a fresh multi-week low. This, in turn, is seen as a key factor behind the GBPUSD’s strong recovery of over 170 points in the last hour, taking along some intraday trading stops placed near the psychological level of 1.1500.
However, it remains to be seen whether the bulls are able to capitalize on the move amid a gloomy outlook for the UK economy, which could continue to act as a headwind for the British pound. Therefore, the focus is now on the UK’s preliminary GDP report for the third quarter, due out on Friday. UK macro data should give GBPUSD a further directional boost.
Technical levels to watch
Source: Fx Street
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