- The US Consumer Price Index (YoY) for November closes to 7%, ahead of the Fed’s last meeting of the year.
- The market sentiment is a mixed-bag, though risk-sensitive currencies like the GBP rise.
- GBP/USD Price Forecast: A triple-bottom in the 1-hour chart targets 1.3300.
The British pound is barely flat as Wall Street opens, up some 0.07%, trading at 1.3230 at the time of writing. The awaited US inflation figures were released, spurring a jump in US equity markets, despite the downbeat market sentiment in the Asian and European session.
Inflation in the US hits a 30-year high
Before the Wall Street open, the US Bureau of Labor Statistics (BLS) unveiled that the Consumer Price Index for November on a YoY reading increased by 6.8%, as foreseen by analysts, though higher than October’s 6.2%. Meanwhile, the Core Consumer Price Index for the same period, which excluded volatile items like food and energy, came at 4.9%, as widely expected, trailed by October’s figure, which increased up to 4.6%.
The high reading emphasized the posture adopted by the Federal Reserve. In the last week, Fed’s policymakers expressed the need to increase the QE’s reduction speed so that the central bank could have room to act as needed. Also, on Monday of the last week, Fed’s Chairman Powell pivot from a dovish stance to a hawkish one, as he reiterated that inflation is no longer transitory, and he coincides with Fed’s Bullard, Bostic, Daly, among others, that a faster bond taper is required.
In the meantime, after shrugging off the initial reaction to the inflation report, US T-bond yields extend their fall, with 2s, 5s, and 10s, down between 1.5-2.0 basis points, sitting at 0.6624%, 1.2386%, and 1.472%, respectively. Further, following the US Treausires footsteps, the US Dollar Index, which tracks the greenback’s performance against a basket of six rivals, slides 0.10%, down to 96.16, at press time.
GBP/USD Price Forecast: Technical outlook
The GBP/USD in the hourly chart shows that GBP buyers defended the 1.3187 level two-previous times in the last three days, meaning that once the downward move broke the 1.3200 figure, it was quickly rejected, reclaiming the 1.3200 handle. Consequently, that has formed a triple-bottom formation that has bullish implications.
At press time, the GBP/USD is also breaking above the confluence of the 50 and the 100-hour simple moving averages (SMA’s), another signal.
The first resistance level would be the R1 daily pivot at 1.3237. A breach of the latter would expose a confluence area around the R2 daily pivot and the 200-hour SMA in the 1.3255-60 range, that once broken, would give way to the R3 daily pivot at 1.3290.
On the flip side, the 1.3200 figure would be the first support. A break of the figure would expose the 1.3187 daily low, followed by the YTD low at 1,3160.