The GBP/USD pair has entered a bullish consolidation phase in the mid-European session, as the bulls face exhaustion after the latest move higher above 1.27 handle.
GBP/USD looks to regain 5-DMA at 1.2762
The major witnessed a fresh buying-wave in early Europe, and since then keeps the recovery mode intact, especially in light of an unexpected rise in the UK CPI numbers for May, as focus shifts from politics to economic fundamentals.
UK CPI rises further in May, its highest since April 2012
Moreover, risk-on rally seen in the European indices combined with positive oil prices boosts the sentiment around the risk currency GBP. Also, renewed weakness seen behind the US dollar across the board, collaborates to the bounce in cable.
Later today, the pair could advance further towards the key support-turned resistance located at 1.2770 levels, should the US PPI numbers disappoint markets and added to further losses in the buck.
However, any pullbacks in the GBP/USD pair could be largely seen as a good selling opportunity, as political uncertainty in the UK and Brexit deal jitters will continue to undermine the pound in the near-term.
GBP/USD Levels to consider
Karen Jones, Analyst at Commerzbank noted: “GBP/USD is negative very near term. GBP/USD remains under pressure following the political chaos that has ensued following the UK general election last week. The market broke down from the 1.2775-1.3060 range and this is now acting as formidable nearby resistance. The intraday Elliott wave count is suggesting that we will see failure here ahead of further losses. We look for losses to extend to the 200 day ma at 1.2571 and then the 1.2468/61.8% retracement. There is potential for the 1.2366 the 10th April low.”