- GBP/USD rose to 1.3285 during early Tuesday.
- Expectations of the EU-UK deal over Irish backstop propelled the pair.
- Today’s UK parliament voting and US CPI will be crucial for traders.
The GBP/USD surged nearly 100 pips to 1.3290 at the start of Asian trading on Tuesday. The Cable carried its previous strength forward and rallied to fresh month high as speculations grew that the UK and the EU policymakers are nearing a deal. British parliamentary vote on the UK PM May’s Brexit proposal and the US inflation numbers will be crucial to watch today.
GBP/USD, also known as Cable, gained previous day as downward revisions to the US December month figures grabbed market attention more than the upbeat January month releases. Adding to the strength was optimism surrounding the UK PM Theresa May’s ability to get EU support on Irish backstop. The same could remove a big barrier for her Brexit deal before its up for voting by the members of parliaments (MPs) in the UK parliament on Tuesday.
During early Wednesday, market players were all watching the meet between the UK PM May and the EU Commission chief Jean-Claude Juncker. While both the leaders were talking beyond the initially anticipated deadline, the British Pound (GBP) rose across the board after rumors spread through wires that the EU and the UK leaders agree over Irish backstop. If that happens, PM May will have a good time getting support at today’s parliamentary vote for her second proposal after the first one was brutally defeated earlier.
Next up on the radar will be how many MPs support PM May’s Brexit plan in today’s parliamentary voting. However, the results of May-Juncker meeting will be crucial before then as any outcome for final Irish backstop support from the EU could help May get strong support from DUP.
On the US side, February month inflation numbers, namely the consumer price index (CPI) will be important. The headline CPI ex-food and energy is likely to remain unchanged at 0.2% and 2.2% on a monthly and yearly basis whereas the CPI figure may also repeat 1.6% prior outcome.
GBP/USD Technical Analysis
Close to overbought levels of 14-bar relative strength index (RSI) and upbeat absence of a sustained move beyond 1.3300 may drag the GBP/USD pair back to 1.3180, 1.3130 and 1.3000 support-levels. However, 1.2970 may limit the pair’s further downside.
Alternatively, an upside clearance of 1.3300 can propel the prices towards 1.3350 and 1.3380 ahead of aiming 1.3410 resistances.
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