GBP/USD rises ahead of CPI data

• GBP/USD is pushing higher thanks in part to US Dollar weakness after Janet Yellen forcefully supported big stimulus for the US economy.
• There are two key events today. In the US it is the inauguration of Joe Biden. This is not expected to be a market moving event but will mark the start of a new era where the Democrats control both branches of government
• UK CPI data for December is expected to show +0.5% YoY increase, up from 0.3%. Core CPI is expected print at 1.6%. A strong reading could put more distance between the BoE and negative interest rates.

GBP/USD technical analysis

GBP/USD is extending gains for a second straight session after rebounding off 1.3515 earlier in the week.

The pair trades within an ascending channel dating back to late September. It also trades above its 20 & 50 sma of the 4 hour chart indicating an established bullish trend. 

The RSI is supportive of more upside at 61.7, above 50 but below the 70 overbought level. 

Bulls could target a move back towards 1.3711 the multi-year high, before 1.38 the upper band of the ascending channel. 

Immediate support can be seen at 1.36, the confluence of the 20 & 50 sma, prior to 1.3525 Monday’s low. (FXB,UDN)

Oil price roses on US stimulus optimism 

• WTI extends gains rising to $53.40 in early European trade boosted by the prospect of the US federal government acting big to support the US economy.
• API inventory data due later

WTI technical analysis

WTI continues its recovery from below $52 reached at the start of the week, pushing back above its 20 & 50 sma on the 4 hour chart and trading above the ascending trendline.

The RSI shows strong conditions, above 50 but lower than the overbought level of 70. This, in addition to trading above the key supports suggests that there could be more upside to be had.

That said the $53.90 level the monthly high, closely followed by $54.00 round number could challenge WTI bulls.

A breakthrough $54.00 could see $54.70 come into play the pre-pandemic high from February 2020.

On the downside $52.50, the confluence of the 20 & 50 sma could offer immediate support followed by $51.80 this week’s low and $50.50 before the psychological level $50. (OIL, DBO)