GBP/USD touches a high of 1.2679 on the day ahead of CPI data
For once, it may not be all about Brexit for the GBP/USD. This week, markets are keeping a close watch on the Fed and it's one of the reasons for the improving sentiment in cable. The pair tested resistance at the 1.2700 handle yesterday before backing off, but buyers showed their resolve by defending the key hourly moving averages.
The near-term bias remains more bullish and we're seeing an extension to the upside now as the dollar remains weak in the session. There is minor resistance to be had around 1.2671-85 at the moment but the key for any upside break will be that 1.2700 handle.
There will be key UK data to be released later in terms of the November CPI data but as usual economic data remains secondary due to Brexit so expect the impact from the release to be minimal. Although, with market sensitivity heightened due to the Fed later, a strong beat could help bolster a push higher in cable towards testing 1.2700 again.
However, regardless of what the data says later, it will be overshadowed not only by Brexit sentiment but also by the Fed decision later. Those two items matter more for the cable more than anything else.
If CPI data later disappoints, we may see cable gains be tempered with but considering that the dollar remains weak, I wouldn't expect much downside for the pair ahead of the Fed decision later. Besides, any move lower remains well supported by the key hourly moving averages around 1.2622-24 for the time being.
