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  • Consumer Prices Index, which includes owner occupiers’ housing prices (CPIH), increased by 3.0%, up from 2.1 percent in the previous 12 months.
  • On Wednesday, the GBP/USD is trading with a bullish bias at 1.3824 amid upbeat UK CPI figures. 
  • Forex trading market participants may buy above the $1.3787 level to target $1.3850 and $1.3907.

The day before, GBP/USD was closed at $1.3806 after posting a high of $1.3914 and a low of $1.3802. The GBP/USD moved to its highest level since August 6, more than one month after the sudden decline in the US dollar. On Wednesday, the GBP/USD is trading with a bullish bias at 1.3824 amid upbeat UK CPI figures. 

If you are interested in trading GBP/USD with forex robots, check out our guide.

The currency pair GBP/USD could not remain there for long and started declining and losing its earlier gains in American trading hours and reversed course to drop for a third consecutive session. The US Dollar Index, which measures the greenback’s value against a basket of six major currencies, fell to 92.32. It weighed on the greenback, which lifted GBP/USD prices during early trading hours on Wednesday.

During early trading hours, the US Treasury Yield on the benchmark 10-year note fell for the second day and reached its lowest level since August 24 at 1.26%, adding strength to the GBP/USD.

A Quick Economic Data Review

On the data front, at 11:00 GMT, the Average Earnings Index from the Office for National Statistics for the quarter surged to 8.3%, against the forecasted 8.2%. It bolstered the British pound and limited further GBP/USD losses.

The Claimant Count Change dropped to-58.6K against the expected-71.7K and weighed on the British Pound from August. That added to the further loss in GBP/USD. The unemployment rate in the UK in July remained flat at 4.6%, as expected.

From the US side, at 15:00 GMT, the NFIB Small Business Index increased in August to 100.1 against the projected 99.0 and supported the US dollar. That added further losses to the GBP/USD pair. At 17:30 GMT, the CPI in August declined to 0.3%, against the expected 0.4%, and weighed on the US dollar, which caused a further loss in GBP/USD. 

Bureau of Labor Statistics  Reports US CPI Figures

In August, the Core CPI from the Bureau of Labor Statistics also fell to 0.1% against the expected 0.3% and weighed on the US dollar, limiting the declining prices of GBP/USD.

After a dismal CPI report from the US, the greenback came under pressure at once and pushed GBP/USD to the six-week highest level. The selling pressure on the US dollar has increased in anticipation of the Fed’s decision not to taper economic stimulus at its upcoming September meeting. This renewed selling of the US dollar pushed the riskier currency pair, GBP/USD, higher on the board.

However, the currency pair GBP/USD came under fresh pressure after UK government scientists said there could be a massive jump in the number of COVID hospital admissions in England if restrictions were not tightened.

According to the Sage committee, hospitalizations in England could reach 2000 to 7000 per day next month, up to 1000. They suggested that a relatively light set of restrictions could curb infections, while Boris Johnson has said that increased vaccinations could avoid further restrictions.

On Tuesday, PM Boris Johnson announced his winter plans for tackling COVID-19. He said that some measures would be kept in reserve as part of the government’s Plan B if the NHS faced unsustainable pressure. 

These included vaccine passports, mandatory face masks, and advice to work from home. However, the waning of the Scientific Advisory Group for Emergencies (SAGE) released on Tuesday suggested that there was a potential for another large wave of hospitalizations in coming months, which kept weighing on the British Pound. Hence, GBP/USD lost all of its daily gains and turned red for the day.

UK Office for National Statistics  Reports Upbeat UK CPI Figures 

In the 12 months to August 2021, the Consumer Prices Index, which includes owner occupiers’ housing prices (CPIH), increased by 3.0%, up from 2.1 percent in the previous 12 months.

The increase of 0.9 percentage points is the biggest in the 12-month inflation rate series of the CPIH National Statistics, which began in January 2006. Nonetheless, this is likely to be a one-time occurrence.

Because of decreased restaurant and café pricing in August 2020 due to the government Eat Out to Help Out scheme and, to a lesser extent, reductions in Value Added Tax (VAT) throughout the same sector, the main upward contribution to change is a base effect. The GBP/USD is on a bullish run due to positive CPI figures from the UK.

Upbeat UK CPI Figures
GBP/USD 4-Hour Timeframe

GBP/USD Price Forecast – Daily Support and Resistance

Support Resistance

1.3768 1.3880

1.3729 1.3953

1.3657 1.3991

Pivot Point: 1.3841

GBP/USD Price Forecast – Upbeat UK CPI Figures in Play

On Wednesday, the GBP/USD is trading with a bullish bias at 1.3824 amid upbeat UK CPI figures. The GBP/USD is facing immediate resistance at the 1.3835 level; this particular resistance level is being extended by 50 periods exponential moving average. 

Bullish crossover above this 50 EMA can expose the currency pair towards the next resistance level of 1.3907 level. This particular 1.3907 trading level is being extended by the previous high placed on September 13. Furthermore, a buying trend continuation above the 1.3907 level can extend further upward trends until the 1.3990 resistance level.

On the lower side, the upward channel is providing strong support at the 1.3787 level. However, they break out of 1.3787 level can extend an additional round of selling until 1.3721 level. On the other hand, 50 periods exponential moving average and the RSI indicator is suggesting a selling bias in GBP/USD pair. 

Therefore, Forex trading market participants may buy above the $1.3787 level to target the $1.3850 and 1.3907. Alternatively, traders can take a sell position below the $1.3780 level today. All the best!

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