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  • Inflation in the U.S. continues to grow within the Fed’s target.
  • US Dollar Index steadies near 95.
  • BoE’s Ramsden says a disorderly Brexit is the unlikely scenario.

The GBP/USD pair extended its losses in the early NA session and touched the 1.30 mark for the first time in 16 days. After finding a support at this level, the pair retraced the majority of its daily losses and was last seen trading at 1.3056, still down 0.15% on the day. Despite that modest recovery, however, the pair remains on track to record weekly losses.

Earlier today, the data released by the UK’s Office for National Statistics revealed that the GDP expanded by 0.4% on a quarterly basis in the second quarter to meet analysts’ estimates. On a negative note, total business investment declined 0.7% in the same period following the first quarter’s 0.5% contraction and fell short of the market expectation for a 0.5% growth.  

In the second half of the day, the U.S. Bureau of Economic Analysis announced that the annual core Personal Consumption Expenditures price index, the Fed’s favourite measure of inflation, came in at 2% in August to match July’s reading. Underlying details of the publication showed that personal spending and personal income both increased by 0.3% on a monthly basis in August.

The US Dollar Index, which rose sharply in the second half of the week on the back of hawkish FOMC remarks and upbeat GDP data, extended its gains to a new 18-day high 95.37. With investors booking their profits in the last day of the third quarter, the index erased its gains and was last seen virtually unchanged on the day at 95.02.  

Meanwhile, speaking at  the Society of Professional Economists Annual Conference, London,  Dave Ramsden, Deputy Governor for Markets and Banking of the Bank of England, stated that a disorderly Brexit was the unlikely  scenario and added: “If the economy continues to evolve, as it has done so far, broadly in line with our August forecast, then further limited and gradual rises in Bank Rate will be appropriate to return inflation sustainably to the target.”

Technical levels to consider

The pair could face the first resistance at 1.3100 (100-WMA) ahead of 1.3175 (Sep. 27 high) and   1.3275 (Sep. 21 high). On the downside, supports could be seen at 1.3000 (psychological level/daily low), 1.2950 (50-DMA), and 1.2895 (Sep. 10 low).