“¢ Softer US consumer inflation figures dampen Fed rate hike prospects.
“¢ A slump in the US bond yields prompts some aggressive USD selling.
“¢ Brexit optimism remains supportive of the strong positive momentum.
The GBP/USD pair quickly reversed the post-BoE dip to 1.3035 area and rallied over 60-pips, to the 1.3100 neighborhood on softer US CPI figures.
The US Dollar weakened across the board after the latest US consumer inflation report, released this Thursday, showed that the headline CPI increased 0.2% in August and the yearly rate dropped to 2.7% from 2.9% previous.
Meanwhile, the core CPI also showed a modest 0.1% m/m rise and indicated that the recent upturn in inflation might have already started easing, dampening prospects for aggressive Fed monetary policy tightening cycle.
The same was evident from a sudden plunge in the US Treasury bond yields, which exerted some additional downward pressure on the greenback and lifted the pair to an intraday high level of 1.3097, the highest since August 2.
Against the backdrop the latest Brexit optimism, the prevalent USD selling bias now seems to have opened room for an extension of the pair’s ongoing positive momentum, possibly towards testing 100-day SMA hurdle near the 1.3200 handle.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near the 1.3130-35 region, above which the pair seems all set to aim towards reclaiming the 1.3200 handle. On the flip side, the 1.3070-65 region now becomes an immediate support to defend, which if broken could accelerate the slide towards the 1.3030 intermediate support en-route the key 1.30 psychological mark.
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