GBP/USD trades around 1.2164 after the anticipated US CPI data

GBP/USD sideways trades on Tuesday after the US inflation data was announced as per market expectations. Cable (GBP/USD) hovers around 1.2164 at the time of press. The intraday ATH price of 1.2205 was briefly touched just after the US CP? data release, but the currency pair quickly pulled back to the lower end of its trading range.

US Consumer Price Index (CPI) Data Release (Feb)

On Tuesday, the US Bureau of Labor Statistics released a report indicating that inflation in the US, as measured by the Consumer Price Index (CPI), declines from 6.4% in January to 6% in February on a yearly basis. The actual reading aligns with the market’s expectation of 6%.

On a monthly basis, the CPI declines from the January inflation figure of 0.5% to 0.4% in February, again staying in line with the analysts’ estimates.

Meanwhile, the Core CPI, which excludes the prices of volatile food and energy, rose 0.5% in February, as expected on a monthly basis, bringing the annual rate down to 5.5% from 5.6%.

Market reaction:

The initial response of the GBP/USD to the inflation data from February was slightly positive. It then pulled back from its daily ATH of 1.2205, and currently trades around 1.2164 at the time of press.

US Dollar Index (DXY) trades slightly higher, around 103.87 on the day ahead of Wednesday’s US Retail Sales data.

Additionally, the current yield of the standard 10-year US Treasury bond decreases by approximately 1% and is at about 3.66% on the day.

Key economic events:

US February Retail Sales on Wednesday at 12:30 GMT is a short-term critical data point which it is necessary to monitor closely. 

The catastrophic Silicon Valley Bank (SVB) collapse has led markets to anticipate a less hawkish stance by the Federal Reserve (Fed). It is likely to avoid lifting rates in the future to avoid further unfortunate banking collapses.

Technical View:

GBP/USD trades above the daily 20-SMA and 50-SMA, 1,2016 and 1.2130, respectively, indicating a positive bias at the press time.

Also, the daily RSI(14) is in positive territory at 55.965. The daily pivot point is 1.2138, with daily resistance levels at 1.2244, 1.2306, and 1.2412. On the downside, daily support levels can be seen at 1.2077, 1.1970, and 1.1909.