GBP/USD slowly recovers, pound consolidates losses

Cable trimmed losses during the American session. Still, the pound is among the worst performers of the day. GBP/USD failed to benefit from the slide of the US dollar across the board. EUR/GBP gained more than 50 pips.

The Dollar Index dropped to 94.23, reaching the lowest since September. The greenback remains under pressure. Trump’s health-care bill failed again and the US dollar tumbled. GBP/USD reached 1.3124 (highest since September) but then dropped sharply after UK inflation data. 

The CPI remained unchanged in June against expectations of a 0.2% rise. The annual rate stood at 2.6%. “Softer headline and core CPI should limit speculation of growing dissent and calls for withdrawing accommodation within BoE's MPC”, said analysts from Westpac. The Bank of England announces its decision on August 3 (includes Inflation Report and press conference). Carney said today that inflation will remain above the target for some time. 

BoE's Carney: Big picture on inflation remains same, fall in GBP pushing up prices

GBP/USD Technical outlook 

The pound plummeted across the board after CPI numbers and cable bottomed at 1.3004. The weak US dollar helped the pair remain above 1.3000. At the moment, GBP/USD trades at 1.3045/50, with neutral short-term momentum. 

The main trend points to the upside, but the pound is having some difficulties holding on top of 1.3100 while the 1.3000 handle is becoming a relevant short-term support. 

“The pair managed to bounce amid persistent dollar's weakness, with the 4 hours chart now showing that the price is battling to recover above an anyway bullish 20 SMA, whilst the RSI indicator aims modestly higher within neutral levels, and the Momentum heads lower around its 100 line, all of which limits chances of a bearish move, but is not enough to confirm a firmer recovery”, said Valeria Bednarik, Chief Analyst at FXStreet.