Categories: Markets

GBP / USD is trading below 1.3850 ahead of US CPI figures.

GBP / USD is trading below 1.3850 ahead of US CPI figures.
  • GBP / USD is moving in range during the New York session, directionless awaiting a catalyst.
  • Strong UK employment figures could boost the British pound.
  • The US dollar index is trading sideways, awaiting US inflation numbers.

The GBP/USD it is trading virtually unchanged on the day and is currently trading at 1.3831. Market sentiment remains bullish, weighing on commodity currencies and weighing on the dollar as investors focus on US inflation figures.

The US dollar index that tracks the dollar’s performance against a basket of currencies is at 92.66, an increase of 0.04%. Meanwhile, the 10-year US Treasury yield is down two basis points (bps) to 1,322%, limiting the uptrend of the US dollar index.

The market awaits UK employment figures and US inflation figures.

On Tuesday, on the UK economic docket, the claimant count change is expected to be -71,000, while the ILO unemployment rate is forecast at 4.6%. If the reading is strong, it could give the British pound a boost. Last week, Bank of England Governor Andrew Bailey said MPC members were divided between policymakers who felt the conditions for a rate hike had been met and those who did not. Later in the week, the Office for National Statistics will release inflation figures.

Meanwhile, across the pond, the CPI figures for August will be released on Tuesday. The US CPI is expected to stand at 0.4%, while the CPI excluding energy and food is forecast at 0.3%. It will be interesting to see the impact of last week’s high PPI readings. The data confirmed that the rise in prices was due to supply disruptions, shortages of consumer and production goods, and rising demand related to the pandemic.

GBP / USD Price Forecast: Technical Outlook

On the daily chart, the GBP / USD pair is trading below last week’s high, approaching the 200-day moving average (DMA) at 1.3821. A sustained break below the latter would keep the bears in charge, putting downward pressure on the pair, with the first key support area at 1.3800. Once that level clears, the next bear barrier levels would be the September 8 low at 1.3726, followed by the August 27 low at 1.3679.

On the other hand, if the pair bounces off the 200 DMA, it could lead to higher prices. The first resistance level would be the 1.3900 figure. Once that level is breached, subsequent bidding zones would be the July 20 high of 1.3983, followed by 1.4000.

The Relative Strength Index is at 53.76 and flat, but still above the midline, supporting a bullish bias.

Technical levels

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