GBP/USD surges through 1.2600 handle, back closer to overnight swing high
• Prospects of May winning the confidence vote prompts aggressive short-covering move.
• The USD bulls seemed unimpressed by CPI print and further fueled the intraday upsurge.
The GBP/USD pair built on its strong intraday recovery from yearly lows and climbed further beyond the 1.2600 handle during the early North-American session.
The pair witnessed a sudden intraday turnaround and staged a solid recovery from a fresh 20-month low level of 1.2477, touched in reaction to the news that leadership contest against the UK PM Theresa May has been triggered.
However, growing confidence that the UK PM Theresa May will be able to win the confidence vote prompted some aggressive short-covering around the British Pound and was seen as one of the key factors behind the pair's strong intraday rebound.
Meanwhile, the US Dollar bulls seemed rather unimpressed by today's mostly in line US consumer inflation figures, reflecting easing inflationary pressure. The disappointment was evident from a modest retracement in the US Treasury bond yields, which undermined the USD demand and further collaborated to the pair's upsurge of over 150-pips.
"The Fed can remove inflation from its list of current worries. Core CPI is 2.2%, PCE lower, the economy at 3% and improving wages. Chairman Powell's note that "The economy is strong, unemployment is near 50-year lows, and inflation is roughly at our 2 percent objective,” is true," Joseph Trevisani, a senior analyst at FXStreet commented on today's US inflation report.
It, however, remains to be seen if the up-move is backed by any genuine buying or is solely led by short-covering from near-term oversold conditions, which runs the risk of being sold into amid persistent uncertainty over the UK's exit from the European Union.
Technical levels to watch
Today Last Price: 1.2621
Today Daily change: 1.2e+2 pips
Today Daily change %: 0.992%
Today Daily Open: 1.2497
Previous Daily SMA20: 1.2769
Previous Daily SMA50: 1.2913
Previous Daily SMA100: 1.2946
Previous Daily SMA200: 1.3275
Previous Daily High: 1.2639
Previous Daily Low: 1.2481
Previous Weekly High: 1.284
Previous Weekly Low: 1.2659
Previous Monthly High: 1.3176
Previous Monthly Low: 1.2723
Previous Daily Fibonacci 38.2%: 1.2542
Previous Daily Fibonacci 61.8%: 1.2579
Previous Daily Pivot Point S1: 1.2439
Previous Daily Pivot Point S2: 1.2381
Previous Daily Pivot Point S3: 1.2281
Previous Daily Pivot Point R1: 1.2598
Previous Daily Pivot Point R2: 1.2698
Previous Daily Pivot Point R3: 1.2756