The Great Britain Pound (GBP) underwent some correction against the US Dollar (USD) on Wednesday, dragging the price of GBPUSD to less than 1.2350 amid some key economic events. The pair had shown skyrocket movement of more than 400 pips yesterday. The technical bias remains bullish because of a higher low in the recent downside wave.
As of this writing, the pair is being traded around 1.2310. A hurdle can be noted near 1.2492, the confluence of trendline resistance as well as 38.2% fib level as demonstrated in the given below daily chart. A break and daily closing above the 1.2500 resistance shall incite renewed buying interest, validating a move towards the 1.2774 resistance zone.
On the downside, the pair is likely to find a support around 1.2300, the confluence of psychological number as well as trendline support ahead of 1.2015, the intraday low of today and then 1.1916, the swing low of 2016.
Rising air fares and food prices helped to push up UK inflation to its highest rate since July 2014 in December. The annual rate of Consumer Prices Index (CPI) inflation rose to 1.6% last month, up from 1.2% in November, the Office for National Statistics said. And higher costs for imported materials and fuels pushed up producer prices. Separate Producer Price Index (PPI) figures show factory gate prices also rose 2.7 per cent year-on-year in December as manufacturers started to pass through higher input costs following the collapse of the pound.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term.