The pound is facing downward pressure against the dollar ahead of the US CPI data

SEPTEMBER 13 - The pound tried to rise on Tuesday, but failed to rise, indicating the possibility of further declines. The upcoming Consumer Price Index (CPI) data on Wednesday will be a pivotal moment and could determine the fate of the pound, as the market appears inclined to anticipate higher interest rates.

The pound tried to rise on Tuesday, but the rally failed, indicating the possibility of further declines. The upcoming Consumer Price Index (CPI) data on Wednesday will be a pivotal moment and could decide the fate of the pound as the market seems inclined to anticipate higher interest rates.

Interest rates have been the focus of attention in the near term, with the spread gains on the short end of the yield curve over the past few days providing support for the dollar. This will continue to be a major driver of the direction we are taking, not only in this currency pair but also in most other major currency pairs. Markets will also be watching the Bank of England as we see a lot of questions being asked about the UK economy at the same time.

From a technical standpoint, the 1.2350 level below appears to be an important support area and is likely to be the next target. It is important to note that in the current volatility, the market appears to prefer resistance patterns and selling opportunities. A breakout of 1.25 could lead to a rise to the 50-day moving average near 1.2650. This move could change market sentiment in the near term. Currently, the market is hovering around the 200-day moving average, a level that usually receives a lot of attention from a long-term perspective.

By looking at chart dynamics, expect turbulence and back-and-forth fluctuations. Caution is advised when determining position size to effectively deal with the inherent noise in the market. Upcoming CPI data is expected to have a significant impact in the coming days. A fall below 1.2350 could trigger further pullbacks with a target set at 1.20 and possibly 1.1850 thereafter.

Ultimately, this market is still very much in line with risk appetite as the main driver, so it is necessary to keep an eye on developments in other markets as well. Position size should be handled with caution, especially in the next 24 hours.

Once the CPI data is released and the market stabilizes, a position adjustment can be considered. For now, the market appears to be recovering and preparing for the next important move, and traders are closely monitoring the development of events.

At 14:49 Beijing time, the pound was 2454/56 against the dollar.