The GBP/USD pulled back after the growing US Consumer Index. It tumbled to a low of 1.4050 which was the lowest since the beginning of May.
Upsurge in US Inflation
The GBP/USD retreated after the US recorded a rise in its Consumer inflation figures. The Consumer Price Index rose by 4.2% which was the fastest CPI growth rate since September,2008. The core CPI increased 3% annually and 0.9% monthly excluding energy prices and volatile food.
The rise in consumer inflation numbers could motivate the Fed to push interest rates higher earlier than expected. A faster timeline for increasing the interest rates will be bullish for the US Dollar.
Analysts are on the lookout for the publishing of the latest Producer Price Index (PPI) by the statistics agency. With a surge in the price of commodities such as crude oil, copper and lumber, analysts expect the PPI to rise. They are closely watching the PPI figures expecting it record a rise of 5.9%. The core PPI is expected to rise from 3.1% to 3.7% this month.
The GBP/USD will also be affected by the high unemployment rate figures. Data by the Bureau of Labor Statistics show that the unemployment rate in April rose to 6.1%. the records also outline that there is an intensifying shortage of available workers.
The GBP/USD also reacted to the strong UK GDP data. The Office of National Statistics (ONS) show that the economy recoiled by 2.1% in March as the country started to recover. The economy declined by 1.5% which was better than the anticipated decline of 1.7%.
As the economy struggled to bounce back in March, many sectors recorded a surge in output rates. Among the sectors that rose was, the industrial, construction and manufacturing industries.
Support and resistance:
Support: 1.400 and 1.3500
Resistance: 1.4100 and 1.4150