The British pound tumbled across the board yesterday, including against the US dollar, as the market sentiment continues to favor sellers. The British pound sellers got one more reason to take the currency lower, as the UK inflation came as a disappointment. Another factor that affected the GBPUSD pair was the positive news in the US. So, there was a double assault on the pair. The US inflation report was also published yesterday, which was broadly in line with the expectation. There is also a lot of bearish pressure on the British pound, and if it continues then more losses cannot be denied in the near term for the GBPUSD pair.
UK CPI
The UK Consumer Price Index was released by the National Statistics during the London session yesterday. The market was expecting the UK CPI to rise by 1.8%. However, the outcome was a disappointing one, as the UK CPI increased by 1.6% in the year to July 2014, which was down from 1.9% in June. Moreover, when month-over-month figure is concerned, then the UK CPI decreased by 0.3%, missing the expectation of a 0.2% decline.
The UK consumer price index for all items less food and energy rose by 1.8%, which is down from 2.0%. So, overall the data was on the negative side, which laid an impact on the British pound and took it lower against most major currencies.
UK PPI
To dip the hole further the UK Producer Prices Index was also released by the National Statistics. Both the PPI input and output registered decline. The UK PPI input slummed by 1.6%, which was more than the market expectation of 1.1%. Similarly, the PPI output decreased by 0.1%, whereas the market was expecting a rise of 0.1%.
The GBPUSD pair tumbled post release, and traded below the 1.6640 support level. There was strength noted in the US dollar as well, which escalated the downside in the pair yesterday.
US CPI
Last but not the least, the US Consumer Price Index was also released by the US Bureau of Labor Statistics during the New York session yesterday. The US CPI came in at 2.0%, which was as expected by the Forex market. Moreover, the US building permits and housing starts data was also released, which exceeded the market expectation. So, the US dollar was boosted after the release, and the GBPUSD continued its decline.
Technically, the 1.6660 support level was an important level for the GBPUSD, which was breached yesterday. Moving ahead, the mentioned support level might turn into resistance, and protect the upside in the GBPUSD pair. On the downside, initial support can be seen around the 1.6580 level, followed by 1.6550. However, the pair is approaching the lower band of Bollinger bands on the weekly timeframe, which might provide support in the short term.
So, keep an eye on all the important levels friends and trade accordingly.
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