GBP/USD struggles to extend recovery beyond 1.3100 handle
• Reverses UK CPI-led slide on broad-based USD weakness.
• US PPI comes in better-than-expects and caps any meaningful recovery.
The GBP/USD pair has managed to reverse UK CPI-led downfall but was seen struggling to build on its up-move beyond the 1.3100 handle.
With markets looking past today's slightly below expectations UK CPI print, a fresh wave of US Dollar selling pressure helped the pair to once again rebound from closer to early Nov. lows touched in the aftermath of dovish BOE rate hike.
The pair, however, seemed lacking any strong follow-through buying interest beyond the 1.3100 handle and was being further capped by today’s better-than-expected US economic data.
According to the data released just a while ago, prices of finished goods and services sold by producers (PPI) surprisingly rose by 0.4% m-o-m during October, with the yearly rate jumping to 2.80% during the reported period. Meanwhile, excluding food and energy prices, core PPI also came in to show an increase of 0.4% m-o-m and 2.4% yearly.
The readings surpassed consensus estimates but failed to provide any respite for the USD bulls, with the US tax reform concerns and the latest comments by St. Louis Fed President James Bullard, that current interest rate level are likely to remain appropriate over near-term prompting some fresh USD selling during the early NA session.
With the only scheduled US economic data out of the way, traders would now take cues from the BOE Deputy Governor Jon Cunliffe's scheduled speech but the key focus would be on the UK jobs report, due during the European session on Wednesday.
Technical levels to watch
Weakness back below 1.3085-80 zone would turn the pair vulnerable to break below 1.3040 support and aim towards testing the key 1.30 psychological mark.
On the upside, any meaningful recovery beyond the 1.3100 handle is likely to confront fresh supply near the 1.3125-30 region, above which a bout of short-covering could lift the pair back towards the 1.3200 handle.