The GBPUSD market experienced significant fluctuations today. During the Asian trading session, the 200-hour moving average (represented by the green line in the chart above) acted as a resistance level, causing the price to rotate down toward a swing area between 1.2388 and 1.23974.
The UK's CPI data exceeded expectations, coming in at 10.1% YoY, compared to the 9.8% forecast. This development reversed the bias and propelled the GBPUSD upward, surpassing both the 200 and 100-hour moving averages (1.24348 and 1.24392, respectively). Consequently, buyers adjusted the technical bias to a more bullish stance above the moving average levels.
However, the price failed to maintain its upward momentum, falling back below the moving averages and returning to the lower swing area between 1.2388 and 1.2397. As the market prepared for the US opening, the price reached its lowest point at 1.2391.
In a back-and-forth volatility , sellers converted once again to buyers, driving the price upward and reclaiming the 200 and 100-hour moving average levels (1.24340 and 1.2439, respectively).
Despite the current bias favoring buyers, traders may be skeptical. Successful trading relies on making educated guesses and leveraging both fundamental and technical analysis. While the UK's stubbornly high inflation rate of 10.1% – unmatched by any other major country – and the US's 5% CPI should theoretically bolster the GBPUSD, buyers failed to capitalize on this earlier today.
Similarly, the initial ascent above the 100/200-hour moving averages should have driven the pair higher, but this move quickly faltered, resulting in a sharp decline. Although a swing area provided support during the downward movement, the subsequent climb back above the 200/100-hour moving averages was unexpected, but it has happened.
With UK inflation remaining higher than US inflation (fundamentally bullish) and the short-term technicals turning positive again, traders will now keep an eye on 1.24348 as a support level. If the price stays above this level and surpasses the high of 1.24715, further gains can be anticipated. However, if the price dips below this point, traders may need to pause and reassess the situation until market clarity is restored.
