Picadilly Circus, London, UK. Image source: Thomas Cendrier, flickr.com
The U.S. dollar started gaining momentum against the pound following the release of the latest consumer price index (CPI) data in the UK. Even so, the greenback, too, continues to be pressured by strong inflation pressures. Read more about it from our latest comprehensive analysis of the EURUSD.
Earlier today, the Office for National Statistics revealed that headline inflation jumped to its highest level in nearly three decades, beating the preliminary forecasts. Inflation pressures remain tight globally, which is why they are at the centre of investors' attention. Meanwhile, GBPUSD reverses from a major resistance level.
GBPUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
As can be seen on the 4H chart above, the price action recently broke down below the lower limit of a major ascending channel. This was followed by a throwback to the 23.6 per cent Fibonacci retracement level at 1.36121.
Given that this Fibonacci threshold is currently converging with the channel's lower limit, a reversal from the current spot level seems highly probable. This is underpinned by the major resistance area (in red). Nevertheless, potential adverse fluctuations to the major resistance level at 1.36400, underpinned by the 50-day MA (in green), are not entirely impossible.
The next target for the dropdown would likely be the 38.2 per cent Fibonacci at 1.35260, though the 100-day MA (in blue) represents an interim barrier. The latter currently signifies the support level at 1.35670. A potentially deeper target is represented by the 61.8 per cent Fibonacci at 1.33867, which was recently crossed by the 200-day MA (in orange).
Headline inflation accelerated to its highest level since March 1992
UK MoM Inflation Rate. Image source: TradingEconomics.com
According to the findings of the CPI report, headline inflation rose to 5.4 per cent in December, above the consensus forecasts of 5.2 per cent. This marks a sizable increase from the 5.1 per cent that was recorded a month prior. Consumer prices thus rose for the third consecutive month.
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