GBP/USD plunges to fresh three-week lows and approaches 1.2300 post-US inflation report GBPUSD Majors Macroeconomics Technical Analysis Inflation
Consumer sentiment in the US has collapsed to a 5-decade low.The GBP/USD plummets following a hotter than expected US inflation report and extends its losses in the week, dropping from around 1.2500 to fresh three-week lows at around 1.2320s. At 1.2313, the GBP/USD remains on the defensive and would extend its downtrend towards the following week’sOn Friday, the US Bureau of Labor Statistics reported that May’s Consumer Price Index increased by 8.6% YoY, higher than the 8.3% estimation.
Analysts at TD Securities said that US inflation data should be of “great concern for the Fed” as both readings showed no signs of peaking; instead, inflation is broadening, and they expect prices to rise further. They added, “We expect the Fed to maintain its aggressive tightening bias in the months ahead, look for the Committee to hike rates by 50bp both next week and in the July FOMC meeting, and believe a 50bp hike in September may not be out of the question.
Later in the day, US consumer sentiment also printed a dismal reading, nosediving to a 50-year low reading, with the UoM survey sliding to 50.2 vs. 58.4 in May. The University of Michigan’s survey also collects inflation expectations, with prices expected to rise by 5.4% over the next year, higher than 5.3% in the previous study. Regarding price expectancy in the next five to 10 years, the poll shows an advance of 3.3%.
The GBP/USD next support would be the figure at 1.2300. Once cleared, the next support would be 1.2200, followed by the YTD low at 1.2155.
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