British pound rises after a surprise increase in UK inflation

The British pound is rising today as traders react to the rising hopes of a Brexit deal between the EU and the UK. According to Bloomberg, the two sides are closer to a deal, which could be signed as early as next week. The currency is also reacting to relatively upbeat inflation numbers from the United Kingdom. According to the Office of National Statistics (ONS) the overall consumer prices rose by 0.7% in October. The core CPI rose by 1.5% while the retail price index rose by 1.3%. These numbers are below the 2% target set by the Bank of England and there is a possibility that they will drop because of the current shutdown in England.

The euro erased earlier gains against the US dollar after data by Eurostat showed that consumer prices in the European Union remained stubbornly low. Consumer prices in the block dropped by 0.3% in October while core CPI rose by 0.2%. Without tobacco, consumer prices dropped by 0.4%. The currency also dropped in reaction to the recent challenges to the EU’s budget. This week, Hungary and Poland vetoed the bloc’s budget, which also includes the €750 billion recovery fund. The two countries disagreed with provisions that tie funding of member states to rule of law. 

The US dollar declined against key currencies today partly because of the weak retail sales numbers released yesterday. The numbers, which missed analysts’ estimates, showed the challenge the US faces because congress has struggled to pass a new stimulus deal. Today, the currency reacted to building permits and housing starts numbers from the US. The data showed that building permits remained unchanged at 1.545 million in October. In the same period, housing starts rose from 1.41 million to more than 1.53 million. 

EUR/USD

The EUR/USD pair retreated from the day’s high of 1.1890 to the current level of 1.1870. On the hourly chart, the price is on the same level as the 15-day and 25-day exponential moving averages. The price also remains above the white ascending trendline, which implies that the price is still in an overall upward trend. Therefore, the pair is likely to continue rising so long as the price is above this trendline. However, if it moves below the line, there is a possibility that bears will push it below 1.1850.

GBP/USD

The GBP/USD pair rose to an intraday high of 1.3298 after the strong inflation data. The price is still below last Wednesday’s high of 1.3313. Like the EUR/USD, it is also above the white ascending trendline. The Relative Strength Index (RSI) has also been rising while the upward movement is supported by the 25-day moving average. Therefore, the GBP/USD is likely to continue rising as bulls target Wednesday’s high of 1.3313.

XBR/USD

The XBR/USD bounced back after falling to an intraday low of 45.19. It is now trading at 44.22. On the hourly chart, it is also above last week’s low of 42.55. It has also vaulted above the 25-day moving averages while the RSI is rising. Therefore, the pair may continue rising during the American session with the next resistance being at 44.71, which is the highest point on Monday.