GBPUSD jumps higher by midday as the risk-on sentiment prevails after Moderna announced that its COVID-19 vaccine delivered immune responses and no safety issues in the 45 participants in early-stage trials.
On the economic data, the UK Consumer Price Index (CPI) came in at 0.6%, beating the expectations of 0.4% in Jun and up from 0.5% in May.
The higher than expected CPI might place a hurdle in the Bank of England to cut the interest rates further. The Producer Price Index – Output registered in at -0.8%, beating the expectations of -1.1%. The Retail Price Index came in at 0.2% in June in line with forecasts.
Analysts still expect that weaker demand will be stronger in bringing inflation down than the rising costs due to coronavirus in raising prices. The GDP in May rose 1.8% below the expectations and is still 24% lower than in February. Chancellor Sunak announced extra measures to boost the economy and will push public borrowing to £350bn. The UK budget deficit is expected to rise to almost twice the level it hit at the peak of the 2009 great financial crisis (GFC).
GBPUSD Daily Technical Analysis
GBPUSD is 0.62% higher at 1.2630, recovering the last two days loses as the pair gains momentum for an attempt to critical resistance at the 200-day moving average. The technical outlook is positive for the short term as long as the pair stays above the 100-day moving average.
On the upside, the initial hurdle for the GBPUSD stands at 1.2635 the daily top. The next resistance for GBPUSD would be met at 1.2668 the high from July 13 trading session. A successful break above 1.2668 is likely to pave the way for a move to 1.2695 the 200-day moving average.
On the other side, first support stands at 1.2549 the daily low. In case the GBPUSD breaks below the 1.2549 support level, the pair could retreat towards 1.2482 the low from yesterday’s trading session. The next support area would be met at 1.2442 the 50-day moving average.
GBPUSD Daily Chart