GBP/USD: Overnight sharp fall
The GBP/USD pair came under some heavy selling pressure on Wednesday and tumbled to over one-week lows, around the 1.2900 round-figure mark. Haresh Menghani, an analyst at FXStreet, reviews the reasons for the bearish move.
“The headline UK CPI accelerated to 1.8% YoY rate in January, up from 1.3% previous, and the Core CPI rose 1.6% YoY from 1.4% prior, both beating expectations.”
“The pair, however, failed to capitalize on the intraday uptick, rather met with some aggressive supply amid pessimism over Britain's talks with the European Union for a free trade deal.”
“The already stronger greenback was further underpinned by better-than-expected US economic releases – Producer Price Index (PPI) and housing market data.”
“The buck had a rather muted reaction to the release of the minutes of the latest FOMC meeting held on January 28-29. The policymakers judged that the current monetary stance was appropriate and indicating that interest rates will likely be on hold for a time.”
“Market participants now look forward to the UK economic docket, highlighting the release of monthly retail sales figures. Barring any immediate reaction, the data is unlikely to be a game-changer and the incoming Brexit-related headlines might continue to act as an exclusive driver of the pair's near-term momentum.”