GBP/USD testing offers near 1.3760, focus shifts to UK CPI

• Extends consolidative mode into Europe.
• UK’s Carillion news weigh.
• Awaits UK CPI amid lack of fresh catalysts.

Having reached its best levels since the Brexit-vote at 1.3767, the GBP/USD pair entered into a phase of bullish consolidation, now extending its side trend into Europe, as the bulls lack vigor amid a lack of fundamental drivers.

GBP/USD wavers around 5 & 10-DMA confluence near 1.3550

The spot built onto Friday’s rally and now looks poised to test the 1.39 handle, as ongoing selling bias in the US dollar across its main competitors continue to keep the sentiment buoyed.

The prices broke higher and closed above the 1.37 mark for the first time since June 2016 on Friday, after a fresh report said Dutch and Spanish finance ministers had agreed to push for a soft Brexit deal that would keep the UK as close to Europe as possible.

However, over the last hours, Cable stalled its bullish momentum, after the reports of the UK’s largest construction and services company going into liquidation hit the wires, weighing negatively on the local currency.

Moreover, the renewed weakness seen in oil prices also collaborates to the stall upside seen in the major. Markets now eagerly await the UK CPI release due tomorrow for the next direction, in absence of relevant macro news amid thin markets. However, the BOE MPC member Tenreyro’s speech could offer some fresh impetus to the GBP bulls.

GBP/USD Technical Levels

Adam Button, a Currency Analyst at AshrafLaidi.com, noted “The chart is increasingly positive as is shown below. With Friday's break of the September high, cable is trading at the best levels since the Brexit vote. There isn't much resistance standing in the way of 1.40 but watch out for UK CPI numbers Tuesday and retail sales on Friday.”

According to ALB Team, “the rate rose above its 2017 top and last week rally lifted the rate near the 61.8% Fibonacci retracement 1.38 of the bearish wave triggered in June 2016 when British citizens voted to leave the European Union. In case of GBPUSD will rise above the 61.8% Brexit retracement the rate it may test area 1.40 and then its 200-week moving average near 1.45.  Beneath 1.35 GBPUSD could lose momentum but only below the long-term bullish trend line is expected to see a severe correction.”