The pound continues to flounder about around the 1.39 region and it has been finding it very difficult to catch a bid over the last few days, irrespective of whether the dollar has been strong or weak. This should make the GBPUSD bulls jittery for the short and medium term as the pound has now exposed itself to a lot of downside risk.
GBPUSD Continues to Flounder
Over the last week or so, we have seen period of dollar strength and dollar weakness as well. While the dollar weakness has been exploited by the bulls in the other currency pairs, the pound has been unable to capitalise on it. This is despite the fact that the pound has been helped by a hawkish BOE which has signalled that it would not shun from hiking rates in the next few months if the situation demands and also to keep itself inline with what the other major central banks are doing.
Also, yesterday, we had the inflation data in the form of CPI from the UK and that came in stronger than expect but the impact of this was pretty much limited. The pair made a surge above the 1.39 region but this lasted only for a very brief while as it was met with selling and then it dropped back below the 1.39 region while it trades around that region, in a weak manner, as of this writing. If the pound is not able to make a bullish run when the dollar is weak and when the UK data is good and hawkish, the traders should be scratching their heads on what they need to do to push the pair higher.
Looking ahead to the rest of the day, we do not have any major news from the UK while the focus is likely to be on the US data with the retail sales and the inflation data coming in later in the day. If this turns out to be strong and continues the trend of strong incoming data from the US, then we should see the strength return in the dollar and this would spell trouble for the pound bulls for the short and medium term as well.
This article was originally posted on FX Empire
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