Pound hits 32-month high

The British pound has posted slight gains in the Tuesday session. Currently, GBP/USD is trading at 1.3619, up 0.25% on the day.

Pound breaks 1.37 level

The British pound has posted modest gains this week, but the currency did reach a milestone of sorts earlier on Wednesday. The pound briefly broke above the 1.37 line, which hasn’t happened since May 2018. GBP/USD has since retreated, but the US dollar nevertheless remains under pressure after Janet Yellen’s testimony on Tuesday. Yellen essentially confirmed that Biden stimulus is on the way, to the tune of some USD1.9 trillion. This message was music to the ears of Wall Street, as the equity markets moved higher. However, this came at the expense of the US dollar, as the pound and other majors registered gains against the dollar. Currently, the US dollar index is at 90.46. Over the past week, the index has vacillated in a range between 90.00 and 91.00. A daily close above or below these points would be an important signal as to where the greenback is next headed.

In the UK, inflation ended 2020 on a positive note, as December headline inflation rose to 0.6%, up from 0.3% and nudging above the forecast of 0.5 per cent. Inflation moved higher as there was an easing of Covid restrictions in December in some parts of the UK. Still, inflation levels are a far cry from the numbers we saw in the early part of 2020, which were closer to 2 percent before Covid sent the UK economy into a tailspin. Headline inflation is closely watched because it is used by the BoE for its inflation target of 2 percent. Core CPI followed a similar trend, as it climbed from 1.1% to 1.4%, and also beat the street consensus of 1.3 percent.

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GBP/USD Technical

• GBP/USD is putting pressure on resistance at 1.3657. Close by, there is resistance at 1.3677.
• There is support at 1.3597, followed by support at 1.3555
• The pair is slightly above the 20-day MA line at 1.3610. A daily close below this line is a bearish technical signal

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