GBP/USD Rises on UK Inflation Data
- GBP/USD Rises on UK Inflation Data
- IG Client Sentiment Reads -1.43; 59% Net-Short
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The GBP/USD has risen for the second consecutive session this week, as UK inflation data was reported this morning at the highest rate since September 2013. Expectations for UK CPI data for April (YoY) were expected at 2.6%, but reported at an actual 2.7%. Technically, this news has now pushed the GBP/USD back above its 10 day EMA (exponential moving average) at 1.2907. If prices continue to trend higher in the short term, traders will next look for prices to challenge the standing 2017 high at 1.2990.
In the event of a price reversal, traders should first look for the GBP/USD to close below the 10 day EMA on the daily chart. A bearish move of this nature may technically suggest a turn in momentum to the downside. Traders may then look for the GBP/USD to challenge last week’s low at 1.2844 as well as the standing May low at 1.2502. Longer term traders should note that the 200 day MVA (simple moving average) is found at 1.2492. This line remains a key value of support for the GBP/USD, and any short term price decline may be considered a retracement in a broader uptrend if prices remains above this value.
GBP/USD Daily Chart & Averages
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Sentiment figures for the GBP/USD remain net negative, with IG Client Sentiment reading at -1.43. With 59% of traders short, when take as a contrarian indicator this value suggests a modest bullish bias for the currency pair. If prices continue to advance to new yearly highs above 1.2990, traders should look for sentiment readings to move towards negative extremes of -2.0 or more. If prices trade lower back below the 10 day EMA, traders may look for sentiment figures to neutralize then flip back to a positive total.
--- Written by Walker, Analyst for DailyFX.com
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