- GBP/USD reverses an early dip and gains traction on hotter-than-expected UK CPI.
- Fears of a no-deal Brexit might keep a lid on any runaway rally, at least for now.
The GBP/USD pair reversed an early European session dip to the 1.2975 region and seemed headed back towards the top end of its daily trading range post-UK macro data.
Following the previous session’s good two-way moves and a range-bound price action through the Asian session on Wednesday, the pair found some support from a subdued US dollar demand. The intraday uptick lacked any strong follow-through and fizzled out rather quickly near 100-hour SMA.
The pair subsequently dropped back closer to the overnight swing low but once again managed to attract some dip-buying following the release of the latest UK consumer inflation figures. According to the report, the headline CPI jumped to 1.8% YoY rate in January as compared to 1.3% previous and 1.6% expected.
Adding to this, the core CPI, Producer Price Index (PPI) also came in stronger than consensus estimates and provided a goodish lift to the British pound. The pair rallied over 30 pips in reaction to the upbeat data, albeit the upside is likely to remain capped amid persistent fears of a no-deal Brexit.
Technical levels to watch
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