The GBP/USD pair finally broke out of its daily consolidative range and refreshed session peak following the release of US macro data.
Currently trading around 1.2525 region, the pair was unmoved after data released from the US showed headline inflation, as measured by CPI showed an unexpected decline of 0.3% on a monthly basis in March, taking the yearly rate lower to 2.4%. Excluding food and energy, core CPI also declined by 0.1% m-o-m, with the y-o-y inflation dropping to 2.0%.
• US: CPI falls 0.3% in March; index excluding food and energy falls 0.1%
The inflations figures were much weaker than consensus estimates and the negativity was further aggravate by disappointing retails sales data, showing total retail sales contracted more than expected by 0.2% m-o-m and excluding auto sales, core sales also declined modestly by 0.1% m-o-m in March.
Today’s inflation figures seemed to suggest that the prevalent inflationary pressure in the US economy could be fading, which might eventually force the Federal Reserve to delay rate-tightening cycle.
The disappointing readings did little to provide any meaningful impetus, with the pair holding with tepid gains amid holiday led lackluster trading action on Friday.
Technical levels to watch
Momentum above 1.2515 level (session high), now seems to lift the pair beyond 1.2535-40 resistance area towards 1.2575 (yesterday’s high) ahead of the 1.2600 handle.
Conversely, a break below 1.25 handle, leading to a subsequent break below 1.2480 horizontal support is likely to drag the pair towards testing its next support near 1.2425-20 zone, with some intermediate support near mid-1.2400s.