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Post-US CPI GBP Weakness Continues to Pervade

GBP
  • GBP/USD's pull lower is on decent volume, with the post-CPI pullback helping tip cumulative futures volumes to 25% above average for this time of day. The USD-driven move in the pair puts 1.2503 as first support, with the 200-dma just below at 1.2492.
  • GBP losses also evident against EUR/GBP, which has defied a potential bear flag formation to break higher and top the 0.8600 handle in recent trade - touching the best level since Dec01 and nearing notable resistance at 0.8635.
  • USD vols are edging lower as they factor out the CPI, however EUR and GBP cross vols remain supported ahead of the ECB, Fed and BoE decisions due later this week - EUR/GBP one-week vols are holding either side of 6 points - the highest level since September.

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