The cable pair slid drastically after the US reported its CPI data for September. The GBP/USD pair’s six-day recovery streak was broken by negative price action on Thursday, which pushed the exchange rate 1.11% down to the $1.2177 level.
After the release of September’s CPI data, the DXY index bounced from its fresh weekly lows. The dollar strength index was up 0.6% till press time. This recovery in the dollar’s strength aided a 0.81% drop in the GBPUSD currency pair on the daily time frame.
On Thursday, the dollar rebounded from its weekly lows after the US reported a greater-than-expected 0.3% inflation rate for September. The YoY inflation also rose to 3.7%, up from the expected 3.6%. This news, coupled with the resilience of the US economy, may increase the chances of the Fed keeping rates high for a longer period.
Investors are keeping a keen eye on the Bank of England’s next move after a spokesperson for the central bank hinted towards a hawkish approach to counter the ever-rising UK inflation. On Thursday, a GDP figure of 0.2% was reported, which met analysts’ expectations.
On the other hand, Industrial and Manufacturing production declined by 0.7% and 0.8%, which paints a negative picture for the UK’s industrial sector. These factors are weakening the pound and acting as headwinds for GBP/USD.
Due to a major correction in the dollar strength index in the past few days, GPB/USD had a strong rebound from its October lows. The currency pair also made a higher high on the daily time frame, which is a strong indicator of a trend reversal.
The GBP/USD is likely to retest the 200 MA If the DXY takes another nosedive in the coming weeks. However, the factor that will flip the GBP/USD forecast bullish will be the reclaim of the key support level of $1.2425, which is also the January 2023 high.
This post was last modified on %s = human-readable time difference 19:27