- GBPUSD jumps to fresh 1-year high after UK CPI surprises slightly higher
- Technical indicators point to overbought conditions following steep rally
- UK employment figures next on the agenda due on Thursday 06:00 GMT
The UK CPI inflation data on Wednesday gave GBPUSD a slight boost as consumer prices grew by 2.0% instead of the expected 1.9%. The pair gently surpassed its previous peak to post a new one-year high of 1.3011.
After a continuous rise since June, we can anticipate some stability as both the RSI and stochastic oscillator indicate overbought conditions.
Therefore, traders might patiently await a clear breakthrough above the psychological level of 1.3000 and the 161.8% Fibonacci extension of June’s decline at 1.3012 before targeting the July 2023 peak of 1.3141. Note that the ascending trendline from April is within the neighborhood, and a violation there might be a prerequisite for a continuation towards the 261.8% Fibonacci of 1.3260.
If bullish forces quickly fade, causing a drop below the nearby support zone at 1.2960, attention may turn to Friday’s low at 1.2900. A deeper downfall could retest the former resistance territory around 1.2850. Otherwise, sellers could stay in play until the price reaches its 20- and 50-day simple moving averages (SMAs) as well as the broken 2021 descending trendline near 1.2750.
In summary, GBPUSD remains on a positive trajectory in the short- and medium-term. However, considering recent rapid appreciation and overbought signals, there could be some consolidation in the short-term.
