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Aug 10 - 11:55 AM

GBP/USD - COMMENT-Room For Sterling To Run After Regaining 1.22 On US Inflation Dip

By Paul Spirgel  —  Aug 10 - 10:05 AM

GBP/USD vaulted higher on Wednesday after U.S. headline and core inflation undershot forecasts, pushing cable above the 10- and 55-day moving averages and allowing traders potentially to target the 30-day Bolli at 1.2272 and early June highs by 1.2292.

The CPI data tempered the markets' view of the Fed's near-term rate path, weighing on the dollar, and could lead to talk of a U.S. rate pivot, possibly fueling further cable gains away from 2022's mid-July low at 1.1761.

Sterling rallied from NorAm open lows by 1.2094 to 1.2237, and traders may aim for the June 16 high at 1.2405 and the June 7 high at 1.2600 if they overcome the upper 30-day Bolli and early June highs.

However, they must contend with UK-specific headwinds, including Britain's complicated growth-inflation picture.
Should UK inflation -- due out on Aug.
-- continue higher, as the BoE expects, growth uncertainties may temper further GBP gains despite the possibility of a converging rate path with the U.S.

Also, the U.S. inflation report is just is just one data point, and rising U.S.
earnings and wages may keep price growth elevated.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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