GBP/USD spikes to 1.3680-85 area, highest since early November post-US CPI

• GBP/USD shot to over a two-month high during the early North American session.
• The latest US inflation figures did little to revive the USD demand or stall the move.
• Sustained strength beyond a descending trend-line will set the stage for further gains.

The GBP/USD pair caught fresh bids during the early North American session and jumped to the highest level since November, around the 1.3680-85 area post-US consumer inflation figures.

The headline US CPI rose 0.5% MoM in December as against consensus estimates pointing to a fall to 0.4% from 0.8% in the previous month. This was enough to push the yearly rate to a fresh multi-decade high level of 7% from 6.8% in November. Moreover, core inflation, which excludes food and energy prices, surpassed market expectations and accelerate to 5.5% from a year ago as compared to 4.9% in November.

Given that an eventual Fed lift-off in March 2022 is fully priced in the markets, the data did little to impress the US dollar bulls. Conversely, a positive risk tone and softer US Treasury bond yields continued denting the greenback's relative safe-haven status. Apart from this, hopes that the Omicron outbreak won't derail the UK economy acted as a tailwind for the British pound and provided a fresh lift to the GBP/USD pair.

With the latest leg up, spot prices climbed to a resistance marked by a downward sloping trend-line resistance extending from the July 2021 swing high. Some follow-through buying will be seen as a fresh trigger for bullish traders and set the stage for an extension of the GBP/USD pair's recent strong move up witnessed since December 20.

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