- The US dollar eased amid concerns of potential obstacles to the debt ceiling deal in Congress.
- A few hard-right Republican lawmakers declared their opposition to the debt ceiling bill.
- Shop price inflation in the UK had reached its highest level since industry records began in 2005.
Today’s GBP/USD price analysis is bullish. After reaching a two-month high, the US dollar eased as concerns emerged regarding the potential obstacles the debt ceiling deal could face in Congress.
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The US dollar index and long-term US Treasuries experienced a rally as traders expressed their approval of the agreement. The deal suspends Washington’s borrowing limit until January 2025 in exchange for spending caps and government program cuts.
However, the dollar faced setbacks due to uncertainty surrounding Congress’s approval of the deal, as a few hard-right Republican lawmakers declared their opposition to the bill. Nevertheless, it is still expected to pass.
Despite the initial positive sentiment towards the deal announced on Saturday, investors now harbor concerns about the agreement. It might be a compromise that could yield negative consequences.
Elsewhere, a survey released on Tuesday indicated that shop price inflation in the UK had reached its highest level since industry records began in 2005. The British Retail Consortium reported a 9.0% increase in prices across supermarkets and retail chains in the year leading up to May. This is compared to an 8.8% rise in April.
While food price inflation, as measured by the BRC, showed a slight cooling to 15.4% from 15.7%, the figures still reflect a notable increase.
GBP/USD key events today
The US will release the Conference Board (CB) Consumer Confidence report, which gauges the extent of consumer confidence in economic activities. As a leading indicator, it can anticipate consumer spending patterns, significantly impacting overall economic activity.
GBP/USD technical price analysis: Bulls must sustain above 1.2400
GBP/USD has just crossed above the 30-SMA on the 4-hour chart, showing bulls have taken control from bears. At the same time, the RSI has gone above the 50 mark, indicating a change in market sentiment.
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However, bulls are approaching the 1.2401 resistance level. Failure to cross above this level could see the price fall back below the 30-SMA to continue the downtrend. On the other hand, a break above would allow bulls to target the next resistance level at 1.2475.
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