-
GBP/USD registers a 0.42% gain on Wall Street, showcasing a risk-on mood with gains between 0.90% and 1.02%.
-
The UK’s annual CPI is projected to dip slightly, but monthly figures are expected to rise, fueling speculations of another BoE rate hike.
-
BoE interest rate probabilities hover around a 50% chance for a 25 bps hike this cycle.
The British Pound (GBP) advances versus the US Dollar (USD) during the North American session, registering gains of 0.42%, on a risk-on impulse while expectations of a sightly high UK inflation report underpin the GBP/USD. At the time of writing, the pair exchanges hands at 1.2200 after bouncing from a daily loss of 1.2128.
GBP/USD rises amid risk-on mood awaiting UK CPI data
Wall Street saw gains register between 0.90% and 1.02%, improving risk appetite. The UK Consumer Price Index (CPI) is expected to fall to 6.6% from 6.7% annually, while core CPI is expected to fall to 6% from 6.2% in September. Still, the monthly CPI figure is expected to rise to 0.5% from 0.3%, raising expectations for another rate hike by the Bank of England (BoE). Interest rate odds at the BoE remain around a 50% chance of a 25 bps hike this cycle after the last meeting saw a break on a 5-4 split vote.
On the US front, Chicago Fed President Austin Goolsby and Philadelphia Fed Patrick Harker were unequivocal in a busy week for Fed policymakers. Harker commented that the current level of rates puts homebuyers on the sidelines, highlighting that the Fed is likely hiking rates.
On the data front, October’s New York Empire State manufacturing index dipped compared to September’s data, but it came in above expectations as new orders fell, while fewer companies signaled higher price receipts, a sign of inflation in the economy.
Given the fundamental backdrop, UK inflation data exceeding estimates would underpin the GBP/USD above the 1.2200 figure. On the flip side, sentiment deterioration and lower inflation could spur flows toward the safe-haven status of the Greenback.
GBP/USD Price Analysis: Technical outlook
The daily chart portrays the GBP/USD as bearish-biased, with the 50-day moving average (DMA) about to cross below the 200-DMA and form a death-cross that could pave the way for further downside. However, if the significant breaks above the latest cycle high seen on October 11 at 1.2337, that would expose 1.2400; otherwise, the GBP/USD could drop below 1.2100 and test the October 4 low of 1.2037 before plunging to 1.2000.
GBP/USD
