Pound Slips After US CPI Data, UK GDP Data Weigh

Fundamental Analysis

* Data Dilemma: Pound sterling have fell against the greenback as the market reacted to the latest inflation data from the U.S. Economic activity released during the European session seems to have added pressure on the pound. According to data, annual core CPI, which excludes volatile food and energy prices, remained unchanged at 3.2% in August, in line with market expectations. On a monthly basis, both CPI and core CPI rose by 0.2% and 0.3%, respectively, exceeding market forecasts. As a result, traders have reduced the likelihood of a 50-basis-point rate cut by the Federal Reserve, with the market now pricing in an 85% probability of a 25-basis-point cut, boosting the dollar. Additionally, the pound also weakened due to disappointing UK GDP data, which stagnated at 0.0%, falling short of the 0.2% forecast.

Technical Analysis

* Technical Breakout: GBPUSD was traded lower following prior breakout below the previous support level 1.30450. MACD which illustrate bearish momentum signal suggest the pair to likely further extend its losses.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.29400. Conversely, a potential reversal is also to be expected and the price could head back towards the level 1.31450 after it breach back above the level 1.30450.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving ahead, investors will remain focused on upcoming economic data releases, particularly initial jobless claims and the Producer Price Index (PPI), to gain further insights into the economic outlook and potential market direction.

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Monitoring

Stay updated on US and UK data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.