Sterling powered higher against the Dollar on Wednesday with prices punching above 1.3200 as investors remained hopeful of a breakthrough in Brexit negotiations.
The fact that the Pound stood stall against its major rivals despite the muted GDP growth in August and mixed production data continues to highlight the currency remains driven by Brexit developments. With the renewed sense of optimism over the EU and UK finding a middle ground boosting buying sentiment towards the Pound, the GBPUSD has scope to trade higher.
In regards to the technical picture, the currency is building momentum on the daily charts with bulls eyeing 1.3290. A solid daily close above the 1.3200 resistance level should inject Pound with enough confidence to challenge 1.3240 and 1.3290, respectively. If the GBPUSD is able to secure a weekly close above 1.3290, this may end up opening a path towards 1.3380. Alternatively, sustained weakness under 1.3200 is likely to signal a decline back 1.3130. Although the technical setup currently favours the bulls, the pendulum could swing back to the bears from renewed Brexit-related uncertainty.
Dollar Index dips below 95.50
The Dollar extended losses against a basket of major currencies as investors engaged in a bout of profit taking ahead of the inflation report scheduled for release on Thursday afternoon. U.S President Donald Trump’s latest criticism of the Federal Reserve played a role in the selloff with prices trading marginally below 95.50 as of writing. A solid daily close below this level is likely to trigger a move towards 95.00 and 94.80, respectively. For bulls to jump back into the game, the Dollar Index needs to keep above the 95.50 level.
Euro rebounds as Dollar weakens
Euro bulls hit the ground running on Wednesday thanks to a softening US Dollar.
The EURUSD has staged a rebound from the 1.1430 level with prices trading towards the 1.1550 resistance as of writing. Although the technical picture still looks somewhat bearish, there could be light at the end of the tunnel for bulls if a daily close above 1.1550 is achieved. If bulls are able to maintain control above 1.1550, the next key levels of interest will be found at 1.1620 and 1.1670. In an alternative perspective, the EURUSD remains at threat of sinking back towards 1.1450 if 1.1550 proves a stubborn resistance.
Gold flat ahead of US CPI
Gold is likely to meander within a modest range ahead of the pending US inflation report on Thursday. The yellow remains rangebound and continues to search for a fresh catalyst to make the next big move. Technical traders will continue to observe how prices behave around the psychological $1200 point. Sustained weakness below this psychological level favours the bears, while a break back above $1200 could bring bulls back into the picture.
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