Article by ForexTime

Sterling rose against the greenback on Tuesday following the better than expected reading in core CPI and PPI output readings in the October inflation report.  The headline CPI came in as expected at -0.1% year over year, matching the September rate. Cable lifted to a peak of 1.5217, having been trading just under 1.5170 ahead of the data release. The pound should continue to remain buoyed versus the dollar as rates in the UK rise at the same pace as those in the U.S. ahead of a potential FOMC rate hike expected in December.

The UK’s Oct-Sept labor market report last week showed unemployment unexpectedly falling to a to a cycle low of 5.3%, and the employment rate rising to a record. UK retail sales for October, due out on Thursday, should also paint a robust picture of the sector.

After dropping in early November following the stronger than expected U.S. payroll report, the GBP/USD has climbed back to its prior range.  Resistance is seen near the 10-day moving average at 1.5197.  Support is seen near the November lows at 1.5020.  Momentum remains negative as the MACD (moving average convergence divergence) index printing in the red, but the trajectory of the MACD has flattened reflecting consolidation. The RSI (relative strength index) is printing a reading of 45, which is in the middle of the neutral range and also reflects consolidation.

Article by ForexTime

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