Sterling Supported Over 1.3810 Level
After hitting a top of $1.3855 and a low of $1.3792, the GBP/USD was closed at $1.3837. On Wednesday, the GBP/USD pair reversed direction and went green, owing to the current weakness of the US dollar and the strength of the British Pound. Despite a better-than-expected Empire State Manufacturing Survey, the US Dollar Index fell on Wednesday. The DXY dropped to 92.42, putting pressure on the greenback, which pushed the GBP/USD higher. The dollar's weakening can be ascribed to investors' cautious behaviour or in anticipation of indications from the Federal Reserve about tapering at its September monetary policy meeting next week.
The rising strength of the British Pound, on the other hand, can be linked to better-than-expected macroeconomic statistics released on Wednesday. The UK's consumer price index increased by the most in a single month since records began in January 1997, pushing the GBP higher on the board.
Officials said the record increase in CPI statistics was most likely a one-time occurrence and that the hike could have been amplified by last year's Eat Out to Help Out Program. Customers might get half-price food and drink between Mondays and Wednesdays under the government's EOHO Scheme, launched in August 2020. According to the Office of National Statistics, because the EOHO plan was only transitory, the upward move in the August CPI rate in 2021 will most likely be transient.
On the data front, the August CPI rose to 3.2 percent against a forecast of 2.9 percent at 11:00 GMT, bolstering the British Pound and pushing GBP/USD higher. The Core CPI rose to 3.1 percent, up from 2.9 percent expected, bolstering the British Pound, which saw further gains in GBP/USD.
The RPI for the year rose to 4.8 percent, beating expectations of 4.6 percent, bolstering the British Pound, and driving GBP/USD prices higher. The PPI Input in August jumped to 0.4 percent against a forecast of 0.2 percent at 11:02 GMT, bolstering the British Pound and adding to advances in GBP/USD.
The PPI Output for August also increased to 0.7 percent, up from 0.4 percent projected, bolstering the British Pound and pushing GBP/USD prices higher. The HPI fell to 8.0 percent in August, vs. an anticipated 12.4 percent, weighing on the British Pound, which capped any advances in GBP/USD at 13:30 GMT. The CB Leading Index fell to 0.1 percent in July at 18:30 GMT, down from 0.5 percent the previous month.
For September, the Empire State Manufacturing Index increased to 34.3 from 18.1 expected, bolstering the US dollar and capping further advances in GBP/USD. Import prices in August fell by -0.3% against expectations of 0.3%, putting pressure on the US dollar, which capped further advances in GBP/USD.
At 18:15 GMT, August Industrial Production fell to 0.4 percent, vs. a forecast of 0.5 percent, weighing on the US dollar and adding to the upward momentum in GBP/USD. In August, the Capacity Utilisation Rate stayed unchanged at 76.4 percent, as expected. The currency pair GBP/USD was higher on Wednesday due to the strength of the British Pound and the weakening of the US dollar.
GBP/USD Intraday Technical Levels
Pivot Point: 1.3841
GBP/USD - Technical Outlook
On Thursday, the technical side of Sterling remains mostly unchanged as it continues to follow the same technical levels from our previous report. The GBP/USD pair is trading at the 1.3827 level, gaining immediate support at the 1.3800 level. On the 4-hour timeframe, this support level is extended by an upward trendline. The closing of Doji and bullish engulfing candles above the 1.3800 level is extending solid support to the GBP/USD pair.
On the resistance side, the pair's next resistance prevails at the 1.3838 level. An intraday pivot point level is also extending this level. Further, on the higher side, the GBP/USD will be exposed towards the 1.3875 level upon the breakout of the 1.3838 level.
The breakout of the 1.3801 level exposes the GBP/USD price towards the 1.3765 and 1.3728 levels. Bullish bias dominates over 1.3800 levels and vice versa. All the best!
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.