- GBP/USD trades sideways as monthly and annual US CPI comes in as expected.
- In response to the US CPI report, the US dollar index (DXY) posted smaller gains.
- Eyes are on Wednesday’s US retail sales data and possible Fed action in March.
GBP/USD side trades on Tuesday after US inflation data was released in line with market expectations. Cable (GBP/USD) hovers around 1.2164 at press time. The intraday price of ATH 1.2205 was briefly touched shortly after the release of the US CPİ data, but the currency pair quickly pulled back to the bottom of its trading range.
US Consumer Price Index (CPI) Data Release (February)
On Tuesday, US Bureau of Labor Statistics issued a report stating that inflation in the US measured Consumer Price Index (CPI), falling from 6.4% in January to 6% in February on an annual basis. The actual value is in line with market expectations of 6%.
On a monthly basis, CPI compared to the January inflation, it decreased 0.5% to 0.4% in February they again remained in line with analysts’ estimates.
Meanwhile, core CPI, which excludes volatile food and energy prices, rose 0.5% in February, as expected on a monthly basis, bringing the annual rate down to 5.5% of 5.6%.
Market reaction:
Initial response GBP/USD it was slightly positive on inflation data from February. It then pulled back from its daily ATH of 1.2205 and is currently trading around 1.2164 at press time.
US Dollar Index (DXY) is trading slightly higher at around 103.87 a day ahead of Wednesday’s US retail sales data.
In addition, the current yield of the standard 10-year US Treasury bond decreases by approximately 1% and is at approx 3.66% on that day.
Key economic events:
February US retail sales on Wednesday at 12:30 GMT is a short-term critical data point to watch closely.
The catastrophic collapse of Silicon Valley Bank (SVB) led markets to expect a less hawkish stance from the Federal Reserve (Fed). It is likely to avoid raising rates in the future to prevent further unfortunate banking collapses.
Technical view:
GBP/USD trades above daily 20-SMA and 50-SMA, 1,2016 and 1.2130, respectively, indicating a positive bias at the time of pressing.
Also daily RSI(14) is in the positive band at 55,965. The daily pivot point is 1.2138 with daily resistance levels at 1.2244, 1.2306 and 1.2412. On the downside, daily support levels can be seen at 1.2077, 1.1970 and 1.1909.
