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Nov 09 - 11:55 AM

GBP/USD - COMMENT-Sterling Bulls Back Away From 1.15 As Focus Shifts To US CPI

By Paul Spirgel  —  Nov 09 - 10:05 AM

GBP/USD fell on Wednesday, retreating from Asia's session high of 1.1563, as traders shifted focus from U.S. midterm elections to Thursday's U.S. CPI data, with bears targeting key 50% Fib support at 1.1375 and potentially the Oct.
12 low at 1.0925 thereafter.

GBP/USD has traded above 1.15 in 11 of the last 13 sessions and has been unable to move above the October post-budget-crisis high at 1.1645, capped by the relatively aggressive Fed rate outlook.

Sterling gains above 1.1645 should continue to be faded as Eurodollar futures 0#ED: are currently pricing the Fed rate peak at 5.12% in June-July 2023, near 60bp above UK Sonia 0#SON3: pricing of the BoE's terminal rate at 4.63% in Aug 2023.

Beyond the U.S. CPI data Thursday, GBP traders will be focused on finance minister Jeremy Hunt's autumn statement, with an overly draconian tax hike and budget cut plan likely to exacerbate recession fears, tempering further GBP gains.

A close below 1.1375, the 50% Fib of 1.1150-1.1600, would add to sterling's bearish structure, opening the way for a test of October lows by 1.0925.

For more click on FXBUZ


Source:
Refinitiv IFR Research/Market Commentary

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