GBP/USD moderate at 1.2350 zone ahead of US CPI.

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  • GBP/USD is moderate at 1.2350 in the run up to the release of US CPI data.
  • The British pound has been resilient to increased negative Brexit newsflow and forecasts of a UK recession in the second half of 2022.
  • Some say there is already a lot of bad news for the price, but political risk limits the potential for a rebound.

Despite the increasingly worrying tone of the Brexit news flow, with the EU threatening to revoke its trade deal with the UK if the latter unilaterally scraps the Northern Ireland Protocol (as it has been talking about this week), it is already despite a group of economic forecasters based in the United Kingdom. forecasting that the UK will be in a technical recession in the second half of this year, the GBP/USD continues to trade steadily at .2350 and within recent intraday ranges.

After the recent strong downward moves, there is a very bearish outlook on the UK economy (and thus the prospects for BoE monetary policy tightening), already taking place, limiting the scope of a further short-term decline for the pound. Meanwhile, moderate FX market trading ahead of key US consumer price inflation data shouldn’t be too surprising. Traders tend to refrain from making big bets ahead of big, potentially market-moving events.

US inflation data is expected to moderate compared to recent months and some say this could induce some profit-taking for the USD as traders pare back the excess of the Fed’s recent aggressive bets. That could offer the GBP/USD a modest short-term lift, perhaps back to 1.2450. But as the volume of political debates over the Northern Ireland protocol and the UK-EU post-Brexit trade deal increases, this could prevent sterling from making further substantial gains.

Technical levels

GBP/USD

Panorama
Last Price Today 1.2359
Today’s Daily Change 0.0044
Today’s Daily Change % 0.36
Today’s Daily Opening 1.2315
Trends
20 Daily SMA 1.2704
50 Daily SMA 1.2961
100 Daily SMA 1.3244
200 Daily SMA 1.3422
levels
Previous Daily High 1.2376
Previous Daily Minimum 1.2292
Previous Maximum Weekly 1.2638
Previous Weekly Minimum 1.2276
Monthly Prior Maximum 1.3167
Previous Monthly Minimum 1.2411
Daily Fibonacci 38.2% 1.2324
Daily Fibonacci 61.8% 1.2344
Daily Pivot Point S1 1.2279
Daily Pivot Point S2 1.2243
Daily Pivot Point S3 1.2195
Daily Pivot Point R1 1.2363
Daily Pivot Point R2 1.2412
Daily Pivot Point R3 1.2447

Source: Fx Street

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