GBP/USD retraces from weekly highs, approaches 1.2200.

The GBP/USD drops almost 0.05% amidst a risk-off impulse while the US dollar weakens.US prices paid by producers easied, while unemployment claims jumped for the second consecutive week.GBP/USD Price Analysis: Retreated from a descending-channel trendline, eyes a break below 1.2200.

GBP/USD edges lower off the weekly highs around 1.2276 near a top-trendline of a descending channel, amidst an upbeat sentiment spurred by a cooler-than-expected US inflation report, now on the side of producers. Further, the US labor market shows signs of ease, weighing on the greenback, underpinned by a hawkish Fed from YTD.

That said, the GBP/USD is trading at 1.2204, down almost 0.05%. Earlier in the day, the pound retraced some of Wednesday’s gains, reaching a daily low at 1.2182, before hitting a daily high at 1.2249. Nevertheless, once the dust settled, cable meanders around current price levels.

The US Department of Labor released another piece of the puzzle regarding inflation. The Producer Price Index (PPI), also known as prices paid by producers, rose by 9.8% YoY, less than the 10.4% estimates and less than June’s reading. In the meantime, the so-called core PPI, which excludes volatile items, followed suit, increasing by 7.6%, unchanged compared to forecasts, but 0.3% less than the previous month.

The data suggests that inflationary pressures on the wholesale side have begun to ease. That would temper the pace of prices paid by consumers in upcoming months. Additionally, the survey added that there are indications that supply-chain conditions are improving.

At the same time, the US Initial Jobless Claims for the week ending on August 6 jumped by 262K less than forecast but rose for the second-consecutive week.

On the UK’s side, the Bank of England (BoE) Chief Economist Huw Pill said that the bank would need to double down on the 2% inflation target on Wednesday. He added that “higher rates in the short term” could also mean some “slowing in the economy.”

GBP/USD Price Analysis: Technical outlook

The GBP/USD exchange rate is located near a two-month-old top-trendline of a descending channel, briefly broken yesterday. However, the false breakout is a sign of buyers’ weakness, with the spot price tumbling within the boundaries of the previously mentioned channel, opening the door for selling pressure.

To the upside, the GBP/USD crucial ceiling level to break would be 1.2300. Once cleared, it could send the pair towards the 100-day EMA at 1.2432. On the flip side, a breach of 1.2200 would pave the way toward the 20-day EMA at 1.2085.

 reflect the official policy or position of By Christian Borjon Valencia | 16:39 GMT

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