DailyFX Table

Ticker

Last

High

Low

Daily Change (pip)

Daily Range (pip)

GBP/USD

1.3266

1.3288

1.3161

103

127

The British Pound outperforms its major counterparts following a pickup in the U.K. Consumer Price Index (CPI), with GBP/USD at risk of staging a larger advance should the Bank of England (BoE) alter the outlook for monetary policy.

Even though the BoE is widely anticipated to retain the current stance at the September 14 meeting, a growing number of central bank officials may argue ‘the withdrawal of part of the stimulus that the Committee had injected in August last year would help to moderate the inflation overshoot while leaving monetary policy very supportive’ as price growth is expected to hold above the 2% target throughout the policy horizon. In turn, Governor Mark Carney And Co. may increase their efforts to prepare U.K. households and businesses for higher borrowing-costs, and the British Pound may continue to gain ground over the next 24-hours of trade especially as the U.K. Jobless Claims report is anticipated to show Average Hourly Earnings picking up for the third consecutive month in July.

Keep in mind, the BoE meeting minutes are likely to reveal a 7 to 2 split within the central bank as Sir David Ramsden joins the Monetary Policy Committee (MPC).

GBP/USD Daily Chart

USD/CAD Risks Larger Correction as RSI Divergence Takes Shape

  • Topside targets remain on the radar for GBP/USD as clears the August-high (1.3268), while the Relative Strength Index (RSI) clears the bearish formation from May and pushes into overbought territory.
  • Need a break/close above the 1.3300 (100% expansion) handle to open up the 1.3370 (78.6% expansion) hurdle, with the next region of interest coming in around 1.3460 (50% retracement), which sits just above the September 2016-high (1.3445).
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