GBP/USD unable to rise above 1.3200 despite USD weakness

Cable moved of daily lows during the American session but still holds below 1.3200 and in negative territory for the day. The recovery was boosted by a slide of the greenback in the market. The US Dollar Index peaked earlier at 93.55, the highest in a week and near the end of the session was trading at 93.30, up for the day but far from the highs.

The pound dropped across the board on Tuesday, despite the UK CPI report that showed a reading of 3.0% for September (y/y) the highest since 2012. Later, Bank of England Governor Mark Carney warned about the risks of a no-deal regarding Brexit arguing that it would pose risks to all Europa. According to Carney, all the surge in inflation was due to the depreciation of the pound. The next BoE meeting is November 2 while tomorrow UK jobs data will be released. 

Brexit vs CPI 

GBP/USD bottomed at 1.3153 during Carney’s testimony. Then it attempted to recover but it failed to rise above 1.3200. During the last hours, the pair has been moving in a range between 1.3170 and 1.3190, unable to take advantage of the slide of the US dollar. 

The political situation in the UK and the stance in Brexit negotiations weigh on the pound. Investors ignored the inflation reading and also Carney’s comments about a possible rate hike and stayed focused on Brexit factors. 

Levels to watch 

In the short-term, the bearish tone persists, although the area around 1.3150/60 offered support. To the upside, the next resistance is seen at 1.3200 and above at 1.3260 (uptrend line from last week highs). A slide back under 1.3160, would expose 1.3120 (Oct 12 low) and below, the next support might lie at 1.3070 (last week low).