- The UK CPI from August surged to 3.2%, against the projected 2.9%, and supported the British Pound and pushed GBP/USD higher.
- On Thursday, the GBP/USD is trading choppy with an upward channel ahead of US Retail and Core Retail Sales from the Census Bureau.
- Forex trading market participants may buy above the $1.3787 level to target the $1.3850 and $ 1.3907.
The day before, GBP/USD was closed at $1.3837 after setting a high of $1.3855 and a low of $1.3792. The GBP/USD reversed course and turned green on Wednesday, despite the US dollar’s weakening and the British Pound’s strengthening. On Thursday, the GBP/USD is trading choppy with an upward channel ahead of US Retail and Core Retail Sales from the Census Bureau.
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The US Dollar Index was down on Wednesday despite a better than expected Empire State survey for manufacturing. The DXY dropped to 92.42 and weighed on the greenback, adding further upward momentum to GBP/USD. Furthermore, the weakness in the US dollar could be attributed to the cautious behavior of investors who were waiting for clues from the Federal Reserve about tapering at the upcoming September monetary policy meeting next week.
On the other hand, the rising strength of the British pound could be attributed to the better-than-expected macroeconomic data released on Wednesday. The consumer price index for the UK surged by the largest ever month-on-month increase since records began in January 1997 and pushed GBP higher on board.
A Quick Economic Data Review
According to officials, the record surge in CPI data was likely to be a temporary change. The government said that the jump might have been accelerated from last year’s Eat Out to this year’s Help Out Program.
According to the government’s EOHO Scheme that emerged in August 2020, the customers could enjoy half-price food and drink between Mondays and Wednesdays. The Office of National Statistics revealed that, as the EOHO scheme was short-term, the upward shift in the 2021 August CPI rate will likely be temporary.
On the data front, at 11:00 GMT, the CPI from August surged to 3.2% against the projected 2.9% and supported the British Pound and pushed GBP/USD higher. Moreover, the Core CPI also increased to 3.1% against the forecasted 2.9% and supported the British Pound, adding further gains in GBP/USD.
The RPI for the year advanced to 4.8% against an estimated 4.6% and supported the British Pound and pushed GBP/USD prices higher. The PPI input in August rose to 0.4% against the projected 0.2% and supported the British Pound and added more gains in GBP/USD. The PPI output for August also surged to 0.7%, against the expected 0.4%. It supported the British pound and pushed GBP/USD prices higher.
At 13:30 GMT, the HPI declined in August to 8.0% against the forecasted 12.4% and weighed on the British Pound, which weighed on further gains in GBP/USD. At 18: 30 GMT, the CB Leading Index dropped in July by 0.1% compared to the previous month’s 0.5%.
From the US side, the Empire State Manufacturing Index from the Federal Reserve Bank of New York for September rose to 34.3 against the predicted 18.1. Thus, it supported the US dollar, which further capped gains in GBP/USD.
The import prices from August dropped by 0.3% against the expected 0.3%. At 18:15 GMT, industrial production from August declined by 0.4% against the anticipated 0.5% and weighed on the US dollar. Whereas the capacity utilization rate in August remained flat at 76.4%, as expected. The strength of the British Pound and the weakness in the US dollar kept the currency pair GBP/USD higher on Wednesday’s trading session.
US Retail and Core Retail Sales from the Census Bureau
The US retail sales and core retail sales will remain in highlights from the Census Bureau. Economists expect a drop until -0.1% and -0.7% in retail and core retail sales this month. Furthermore, the focus of investors has now shifted towards the upcoming two-day monetary policy meeting next week. Investors await the meeting to find some clues about tapering, which has been weighing on the market.
GBP/USD Price Forecast – Daily Support and Resistance
Pivot Point: 1.3828
GBP/USD Price Forecast – US Retail and Core Retail Sales from the Census Bureau in Focus
On Thursday, the GBP/USD is trading choppy with an upward channel ahead of US Retail and Core Retail Sales from the Census Bureau. The GBP/USD faces the next resistance at the 1.3835 mark; a 50-day exponential moving average extends this particular resistance mark.
A bullish crossover over this 50 EMA can move the currency pair towards the next resistance level of the 1.3907 mark. This particular 1.3907 trading level is being extended by the previous high, located on September 13. Besides, a buying trend continuation over the 1.3907 level could stretch upward trends till the 1.3990 resistance mark.
On the lower front, the upward channel is presenting substantial support at the 1.3787 level. Nevertheless, if they break out of the 1.3787 level, they can prolong a further round of selling until the 1.3721 level. On the other hand, the 50-period exponential moving average and the RSI indicator suggest a selling bias in the GBP/USD pair.
Therefore, Forex trading market participants may buy above the $1.3787 level to target $1.3850 and $1.3907. Alternatively, traders can take a sell position below the $1.3780 level today. All the best!
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