GBP/USD refreshes daily low, around 1.3525 area on stronger US CPI
- GBP/USD dived over 50 pips in the last hour amid a strong pickup in the USD demand.
- Hotter-than-expected US CPI print boosted Fed rate hike bets and lifted the greenback.
- Bears might wait for sustained break below the 1.3500 mark before placing fresh bets.
the GBP/USD pair witnessed a dramatic turnaround in reaction to stronger US CPI prints and dived to a fresh daily low, around the 1.3525 region in the last hour.
Following a brief consolidation, the US dollar caught fresh bids during the early North American session following the release of the latest US consumer inflation figures. This, in turn, was seen as a key factor that attracted some selling around the GBP/USD pair and led to a sharp pullback of over 50 pips from the daily high, near the 1.3580 region.
According to the data released this Thursday, the headline US CPI edged higher to 0.6% in January as against expectations for a reading of 0.5%. Moreover, the yearly rate reached a fresh multi-decade high and accelerate to 7.5% during the reported month, up from 7% recorded at the end of 2021, against surpassing consensus estimates.
Adding to this, the core CPI, which excludes food and energy prices, rose 6.0% from a year ago as against 5.5% in December and 5.9% anticipated. The data boosted bets for a 50 bps Fed rate hike in March, which was evident from an uptick in the US Treasury bond yields. This, in turn, benefitted the USD and exerted pressure around the GBP/USD pair.
It will now be interesting to find if the pair is able to find some buying at lower levels or weakens further below the key 1.3500 mark, confirming a near-term bearish breakdown. Hence, it will be prudent to wait for a strong follow-through selling before traders start positioning for any further near-term depreciating move for the GBP/USD pair.
Technical levels to watch