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GBP/USD trading below the psychological 1.60 handle

FXStreet (Barcelona) - GBP/USD is trading at 1.5926, down -0.99% on the day, having posted a daily high at 1.6099 and low at 1.5905.

Today the pound is trading at the lowest levels since November last year ad below the psychological 1.60 handle. The UK September CPI inflation gave the market clues into the disinflationary pressures that have been coming about in the UK economy of late, and that had not really been on the MPC’s agenda. The core CPI read far lower than expectations arriving at 1.5% y/y in September vs 1.8% expected. Markets can now likely expect there to be further risks ahead in that the inflation in the UK may remain low even into 2015; For that traders are pricing in a much lower sterling. However, it is worth noting that the greenback has been strong due to a hawkish environment from the Fed, but whether risks of either the dollar being regarded as too strong for the US economy and therefor unsustainable or simply that the Fed begin to start adopt a more dovish tone, both could be supporting factors to cable in the medium term and keep the pair range bound.

GBP/USD noteworthy levels

With spot trading at 1.5927, we can see next resistance ahead at 1.5945 (Weekly Classic S1), 1.5971 (Daily Classic S3) and 1.6002 (Hourly 20 EMA). Support below can be found at 1.5905, 1.5812 (Weekly Classic S2), 1.5671 (Weekly Classic S3) and 1.4868 (3 Year Low).

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