Title: GBP/USD sticks to gains above 1.1700 mark, sits near two-week high ahead of US CPI

9/13/2022 8:34:23 AM GMT

By: AnalysisWatch

On Tuesday, the GBP/USD pair built on its recent recovery move from the lowest levels since 1985, gaining traction for the third consecutive day.

The pair hit an almost two-week high in the 1.1730-1.1735 range during the first half of the European session, supported by sustained selling around the US dollar.

The US dollar remained pressured near the monthly low touched the previous day amid signs of a sustained decline in US inflation. In fact, a survey released by the Federal Reserve Bank of New York on Monday showed that consumer expectations for US inflation over the coming years declined sharply to the lowest level since October 2021.

This, along with a modest decline in US Treasury bond yields and a generally positive risk tone, weighed on the greenback and acted as a tailwind for the GBP/USD pair.

The British pound was further supported by largely upbeat UK employment figures, showing that the unemployment rate fell to its lowest level since 1975 and stood at 3.6% for the three months to July.

In addition, average weekly earnings surpassed expectations and increased the risk of wage inflation. This may force the Bank of England to tighten its monetary policy at a faster pace, which is seen as another factor that impresses bullish traders and gives an additional boost to the GBP/USD pair.