GBP/USD Plans to Establish Above 1.1900

The GBP/USD currency pair has been recovering on a strong note. This followed a little correction in the direction of 1.1880. This was the pair’s state in the early European session on Monday.

Early Struggles for the Pair Again

The cable pair renewed its intraday low point of 1.1908. It is speculated to extend further while there is a sell-off around the US Dollar index.

The US Dollar index has dropped sharply to nearly 107.80. It is now possible that the loss is extended. Investors think the US price pressure is close to its peak.

GBP/USD price chart. Source TradingView

The general speculation is supported by the low oil price in July and possibly a lower aggregate demand. The price will be dragged lower by an expectation of low demands over time. It will eventually culminate in a reduction of the global inflation rate.

As things stand, there is still a stable odds of a mage Federal rate increase.

Investors in the UK are awaiting the publication of the employment numbers and inflation report. The Unemployment Rate is currently at 3.8% and it is considered fairly stable. The focus will now be on data from the average hourly earnings.

When inflation confronts every earner in the economy, low earnings dampen the market. 

Although in the past week, Fed officials gave hints they don’t support higher rate increases. The market has priced a higher rate after the publication of the consumer inflation. Investors reacted quickly to this and promptly cut down their 100 bps bets for July.

Aside from that, the Dollar profit-taking was extended by the risk-on mood. It is taking up from a twenty-year high and it gives a good lift to the GBP/USD pair.

Moves in the UK

The UK’s CPI came in higher at 9.3% against the previous figure of 9.1%. But the central CPI might improve just a little bit to 6% from 5.9% earlier. This will push the Bank of England to further increase interest rates.

By the way, investors are turning a deaf hear to politics in the UK’s economy. Rishi Sunak is registering a lead to be the country’s next Prime Minister. Observers are waiting to see who will go face-to-face with him in the final round.

The Pound drew more support from the increasing possibility of a 50 bps increase. The speculated rate increase for August was encouraged by high macro releases in the UK. 

There has been a strong 100 pips move up on Monday. It could be connected with technical sales on strength above the 1.1900 benchmark. Brexit troubles could, however, be a headwind for the Pound and hold back bullish bets on the GBP/USD pair.