- Summary:
- GBP/USD Analysis: The British pound had its biggest daily gain on Tuesday as the October CPI data broke the back of the US dollar.
On Tuesday, GBP/USD had a strong surge as the dollar weakened against the major global currencies. Consequently, the British pound to US dollar exchange rate soared 1.71% in a single day. A similar trend was observed in the dollar pairs of other currencies.
The GBPUSD pair was trading at 1.2485 during its New York session. This strong surge can be attributed to the October CPI data which showed that the inflation is finally decreasing after a strong uptrend.
As a result, the DXY index was down 1.43% on Tuesday. In terms of the drop, this was the biggest one-day decline in the dollar strength index since the start of this year. A similar trend was observed in the 10-year treasury yield which tanked 3.9% after the release of the CPI report. This weakness in the greenback resulted in a very positive price action in equities and precious metals.
We can easily identify two major breakouts on the GBP/USD chart after today’s positive price action. The first breakout is from the downward trendline which now seems to be confirmed. However, the second breakout which is above the 200 MA is yet to be confirmed.
The next major resistance for the pair appears to be 1.274 which is well above the current level.
