Pound Sterling has stabilized above 1.2700 on upbeat market sentiment.
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- Pound Sterling has stabilized above 1.2700 on upbeat market sentiment.
- The release of UK factory data, if upbeat, would ease fears of a technical recession.
- The US Dollar delivers a modest recovery ahead of US Inflation data.
The Pound Sterling (GBP) faces an intense sell-off as the market sentiment has been impacted significantly. Higher-than-projected United States Consumer Price Index (CPI) data has escalated volatility in global markets. The US Bureau of Labor Statistics (BLS) has reported that monthly headline and core inflation were up by 0.3%. The annual headline inflation rose at a significant pace of 3.4% vs. expectations of 3.2% and the prior reading of 3.1%. The core inflation grew by 3.9%, slightly slower than the prior reading of 4.0% but remained higher than expectations of 3.8%.
Further action in the Pound Sterling will be guided by the UK factory data, which is due to be released on Friday. Last month, UK Finance Minister Jeremy Hunt commented that the economy is not as bad as revised Gross Domestic Product (GDP) numbers for the third quarter would suggest. The economic data is expected to remain upbeat but risks of a technical recession are still high as the BoE forecasted a stagnant performance in the last quarter of 2023.
Pound Sterling witnesses a steep fall after refreshing weekly high near 1.2770 as the risk-appetite of the market participants has dampened after the release of the higher US inflation data. The GBP/USD pair is failing to attain stability above the 61.8% Fibonacci retracement at 1.2710 (of the move from 13 July 2023 high at 1.3142 to 4 October 2023 low at 1.2037). The overall trend is still bullish as all short-to-long term Exponential Moving Averages (EMAs) are sloping higher.
The 14-period Relative Strength Index (RSI) is hovering around 60.00. A decisive break above the same will trigger a bullish momentum.
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