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GBP/USD Has Bounced From A Critical Support Level, Although Additional Gains Are Unclear

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GBP/USD Current price: 1.3763

  • UK annual inflation eased in July to 2%, taking pressure off the BOE.

  • The UK reported 33,900 new coronavirus contagions and 111 deaths.

  • GBP/USD has bounced from a critical support level, although additional gains are unclear.

The GBP/USD pair bottomed at the beginning of the day at 1.3720, its lowest in nearly a month, but managed to bounce back, currently trading in the 1.3760 price zone, up for the day. The pound advanced modestly amid mixed UK inflation-related figures. The Consumer Price Index was up 2% YoY in July, below the previous 2.5%. The core reading printed at 1.8%, also missing expectations, although the Producer Price Index in the same period was higher than anticipated, hitting 4.8%. Easing inflationary pressures took off some pressure from the Bank of England, although economists still expect it to hit 4% this year.

Meanwhile, the UK coronavirus situation seems to have stabilized. The country reported 33,904 new contagions and 111 deaths in the last 24 hours and has fully vaccinated roughly 61% of its population. The country won’t publish macroeconomic data on Thursday.

GBP/USD short-term technical outlook

The GBP/USD pair has bounced from the 61.8% retracement of its July range, but the advance stalled around the 50% retracement of the same rally at 1.3775, the immediate resistance level. The 4-hour chart shows that the risk remains skewed to the downside, as the pair keeps developing below all of its moving averages, with the 20 SMA heading south below the longer ones. Technical indicators consolidate within negative levels and near their daily lows, signaling absent buying interest.

Support levels: 1.3720 1.3675 1.3630

Resistance levels: 1.3775 1.3825 1.3860

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