GBP/USD Hovers Above 1.1900 as UK Inflation Hits Highest Level Since 1981
2022.11.17 02:17
The pair advanced modestly on Wednesday and climbed above the 1.1900 level as investors assessed macroeconomic data coming from both shores of the Atlantic.
At the time of writing, the GBP/USD pair is trading at 1.1923, 0.5% above its opening price, having set an intraday high of 1.1941 amid persistent USD weakness.
During European trade, the U.K. reported that , measured by the CPI, jumped to 11.1% in October, the highest rate since 1981. The reading came above expectations of 10.7%. Meanwhile, the rate remained unchanged at 6.5% in the same period but also came above expectations of 6.4%.
Bank of England Governor Andrew Bailey commented after the data that the U.K. inflation reflects a series of supply shocks that “couldn’t have been predicted” but that those shocks are finally starting to fade, and inflation in the U.K. could peak around 11%.
Elsewhere, the U.S. came in better than expected, as in October, the total receipts of retail stores increased by 1.3% above the consensus of 1%. The retail sales control group was also up 0.7% in the same period.
Despite a short-lived intraday recovery, the greenback remains on the back foot as market participants continue to discount a less aggressive Fed in December.
The GBP/USD pair holds a positive bias from a technical perspective, but indicators are starting to lose traction on the daily chart. The RSI trades flat above its midline, while the MACD printed a lower green bar, indicating decreasing bullish momentum. On the upside, the GBP/USD pair could face resistance at the weekly highs around 1.2030 and the 200-day SMA at 1.2237.
On the downside, the 1.1750 zone and the 100-day SMA at 1.1650 stand as the next support levels in case of a technical correction. If lost, the cable could extend its decline to the 20-day SMA at the 1.1520 area.
