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  • GBP/USD now seems to have entered a bullish consolidation phase near multi-month tops.
  • Brexit optimism, Wednesday’s hotter-than-expected UK CPI continued lending some support.
  • Bulls now seemed reluctant to place any aggressive bets ahead of the FOMC meeting minutes.

The GBP/USD pair extended its sideways consolidative price action and remained confined in a range around mid-1.3200s, just below multi-month tops post-UK CPI.

The uncertainty over the next round of the US fiscal stimulus measures forced investors to continue dumping the US dollar, which, in turn, assisted the pair to surge past the 1.3140-50 supply zone on Tuesday. This comes amid improving sentiment on Brexit talks, which underpinned the British pound and pushed the GBP/USD pair to the highest level since January during the Asian session on Wednesday.

Apart from the Brexit optimism, the sterling was further supported by hotter-than-expected UK consumer inflation figures. In fact, the headline UK CPI rose 1.0% YoY in July as compared to +0.6% expected. Meanwhile, the core inflation gauge (excluding volatile food and energy items) also surpassed expectations and came in at +1.8% YoY during the reported month, up from the 1.4% increase in June.

The data took some pressure off the BoE to ease further, instead offered the UK central bank more time to continue with the current wait-and-see approach. This, in turn, should continue lending support to the sterling and supports prospects for additional gains. However, overbought conditions might hold investors from placing fresh bullish bets ahead of Wednesday’s release of the FOMC meeting minutes.

Technical levels to watch