The British pound maintained strong gains as the currency pair was seen trading above $1.3300. The gains came after the monthly inflation data showed a strong increase overall. Headline consumer prices accelerated 2.9%, rising sharply from 2.6% the month before and beating estimates of 2.8% increase. The core CPI also increased sharply, rising 2.7% on the month. PPI input and output prices also increased significantly suggesting that inflation in the coming months will continue to rise further.
Looking ahead, the economic data today will see the UK's labor market statistics. The average earnings will be the main focus with economists forecasting an increase in wages by 2.3%. However, with yesterday's inflation rising faster than expected, wage growth continues to lag. Elsewhere, in the US trading session, the monthly producer prices data will be released today. Overall, the data is expected to show that inflation at factory gate might have increased in August, following amodest decline the month before.
EUR/USD Intraday Analysis
EUR/USD (1.1982) closed with some minor gains yesterday, and price action is looking to retest the 1.2058 resistance level once again. The strong consolidation near this resistance level suggests that the bullish momentum could be intact. The reversal near the minor support at 1.1936 shows a potential cup and handle pattern in the making.
Price needs to breakout above 1.2058 in order to push higher. This also puts the minimum upside in EUR/USD towards 1.2180 - 1.2200. However, in the event that EUR/USD fails to breakout above 1.2058, we can expect the consolidation to keep the currency pair trading flat within 1.2058 and 1.1882 levels of resistance and support.
GBP/USD Intraday Analysis
GBP/USD (1.3309) maintained the strong gains yesterday. The gains came as the UK's parliament voted on the new Brexit bill. The faster than expected inflation data also added to the bullish sentiment. Having cleared the 1.3300 level, the British pound could be seen posting higher gains. However, watch for a potential retest towards 1.3236 levels which could now be tested for support.
This level initially served as resistance, but the price action shows the strong breach of this resistance which came on the back of the inflation data. Thus, it is quite likely that the GBP/USD could be seen falling back to this support level ahead of maintaining further gains. In the event that GBP/USD slips below 1.3236, then expect prices to consolidate above the support level of 1.3161.
XAU/USD Intra-Day Analysis
XAU/USD (1332.13) Gold prices gapped down at the start of the week, but price action is showing a sign of reversal after support looks to be established at 1324.72. This completes the gap from September 1st and looks to be a minor support level that has been established. It also puts the bias in gold to the upside in the near term. The support at 1324.72 also coincides with the lower median line which also offers a dynamic support level. A rebound is, therefore, expected which will see gold prices pushing higher to retest the 1345.87 resistance level.
A retest of this level will fill the gap from Friday's close. Gold prices are likely to remain range bound in the near term within the 1345.87 and 1324.72 levels of resistance and support. A breakout off these levels will suggest further gains or declines to come. The bias, however, remains to the downside with gold prices likely to target 1300.00 region of support which is pending a retest.