GBP/USD retreats back under 1.3850 after hitting monthly highs above 1.3900
- US dollar recovers ground after falling sharply on US data.
- Inflation decelerated in August in the US but remains elevated.
- GBP/USD fails to hold above 1.3900, back into recent range.
The GBP/USD was unable to hold above key technical levels and pulled back amid a recovery of the US dollar. Cable peaked after the beginning of the American session at 1.3913, the highest level in a month and then weakened. It erased most of its daily gains and it is hovering slightly below 1.3850.
US inflation slows
Data released earlier on Tuesdays showed an improvement in the UK Job market. The latest report was US CPI for August that showed an increase of 0.3% in the headline, below the 0.4% expected.
“US consumer price inflation slowed in August, reflecting a moderation in the re-opening hotspots of the economy, where prices had been surging. Elsewhere, inflation pressures are broadening out while elevated inflation expectations risk keeping CPI well above target for much longer than the Federal Reserve currently anticipates”, explained analysts at ING.
The US dollar initially dropped across the board amid a sharp decline in US yields but then recovered ground, erasing CPI losses, even as yield remained in negative. The 10-year yield reached 1.35% and then dropped to 1.26%. The move weighed on the dollar and boosted gold.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
