GBP/USD Ends the Week Near 1-Month High, Focus Turns to U.K. CPI
The GBP/USD advanced slightly on Friday but remained within a narrow range as the U.S. dollar managed to stabilize after Thursday’s heavy losses thanks to the negative shift in risk sentiment at the beginning of the day.
At the time of writing, the GBP/USD pair is trading at the 1.2230 area, 0.2% above its opening price, having struck a one-month high of 1.2249. The Cable is also headed to post a 1.17% weekly gain. Meanwhile, the dollar measured by the DXY index trades virtually unchanged on the day at the 102.20 zone but 1.65% lower in the week.
The U.S. Consumer Sentiment Index by the University of Michigan showed an improvement in January, coming at 64.6 from its previous reading of 59.7 and above the 60.5 expected. The 5-year inflation expectations increased from 2.9% to 3% in January, but the year-ahead inflation expectations dropped to 4% from 4.4% in December. The numbers helped to improve sentiment but did not help the dollar.
On the other hand, investors continue to digest Thursday’s Consumer Price Index (CPI) data from the U.S., which supports a less aggressive Fed. Both the headline and core annual inflation figures eased in December, coming in at 6.5% versus 7.1% in November and 5.7% versus 6.0% prior, respectively. After the release, the WIRP suggests a 25 bps hike on February 1 is fully priced in, with only 5% odds of a larger 50 bp move.
Next week, the United Kingdom will release Consumer Price Index data, which will be closely scrutinized for fresh hints on the Bank of England policy outlook. The U.K. December annual inflation rate is expected to ease to 10.6% from 10.7% in November, while the core rate is seen increasing to 6.6% from 6.3% the previous month.
From a technical perspective, the GBP/USD holds a short-term bullish bias according to indicators on the daily chart, while the price continues to post higher highs above its main moving averages.
If the GBP/USD manages to break above the 1.2250 area, the following resistance levels could be found at the 1.2300 psychological level and the December monthly high at 1.2446. On the downside, support levels line up at the 1.2100 zone and the 20-day SMA at 1.2083.
At the time of writing, the GBP/USD pair is trading at the 1.2230 area, 0.2% above its opening price, having struck a one-month high of 1.2249. The Cable is also headed to post a 1.17% weekly gain. Meanwhile, the dollar measured by the DXY index trades virtually unchanged on the day at the 102.20 zone but 1.65% lower in the week.
The U.S. Consumer Sentiment Index by the University of Michigan showed an improvement in January, coming at 64.6 from its previous reading of 59.7 and above the 60.5 expected. The 5-year inflation expectations increased from 2.9% to 3% in January, but the year-ahead inflation expectations dropped to 4% from 4.4% in December. The numbers helped to improve sentiment but did not help the dollar.
On the other hand, investors continue to digest Thursday’s Consumer Price Index (CPI) data from the U.S., which supports a less aggressive Fed. Both the headline and core annual inflation figures eased in December, coming in at 6.5% versus 7.1% in November and 5.7% versus 6.0% prior, respectively. After the release, the WIRP suggests a 25 bps hike on February 1 is fully priced in, with only 5% odds of a larger 50 bp move.
Next week, the United Kingdom will release Consumer Price Index data, which will be closely scrutinized for fresh hints on the Bank of England policy outlook. The U.K. December annual inflation rate is expected to ease to 10.6% from 10.7% in November, while the core rate is seen increasing to 6.6% from 6.3% the previous month.
From a technical perspective, the GBP/USD holds a short-term bullish bias according to indicators on the daily chart, while the price continues to post higher highs above its main moving averages.
If the GBP/USD manages to break above the 1.2250 area, the following resistance levels could be found at the 1.2300 psychological level and the December monthly high at 1.2446. On the downside, support levels line up at the 1.2100 zone and the 20-day SMA at 1.2083.
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