- GBP/USD remains within a familiar range held for the last week or so.
- Traders are choosing to wait on the sidelines ahead of the release of the UK CPI report.
- The technical setup favors the bears and supports the prospects for further losses.
The GBP/USD pair extends its sideways consolidation move on Wednesday and remains within a familiar range maintained for the last week or so. Spot prices are currently trading around the 1.3070-1.3075 region, almost unchanged on the day as traders choose to wait on the sidelines ahead of the UK consumer inflation numbers.
Ahead of key data risk, speculation that the Bank of England (BoE) could be on track to accelerate its rate cut cycle continues to undermine the British Pound (GBP) and acts as a headwind for the GBP pair. /USD. That said, a modest pullback in the US Dollar (USD) offers some support to the currency pair and helps limit the decline.
From a technical perspective, the range-bound price action could still be categorized as a bearish consolidation phase in the context of the recent pullback from the 1.3435 area, or the highest level since March 2022 touched last month. Furthermore, the oscillators on the daily chart remain in negative territory and are still far from being in the oversold zone.
This, in turn, suggests that the path of least resistance for the GBP/USD pair remains to the downside. Therefore, a subsequent decline towards the 1.3020 area, or a one-month low touched last Thursday, en route to the psychological 1.3000 mark, seems a distinct possibility. The decline could extend towards the 100-day SMA, around the middle of 1.2900.
On the other hand, the round figure of 1.3100 is likely to act as an immediate hurdle ahead of the horizontal zone of 1.3125. Sustained strength beyond the latter could trigger a short-covering rally and allow the GBP/USD pair to aim to reclaim the 1.3200 mark. Spot prices could rise further towards the next relevant hurdle near the 1.3235-1.3240 region.
GBP/USD daily chart
economic indicator
Consumer Price Index (YoY)
The IPC publishes it National Statistics and measures the change in prices of a basket of goods and services purchased by households for consumption. The CPI is the main indicator to measure inflation and changes in consumption trends. A reading higher than expectations is bullish for the pound, while a reading lower is bearish.
Next post:
Wed Oct 16, 2024 06:00
Frequency:
Monthly
Dear:
1.9%
Previous:
2.2%
Fountain:
Office for National Statistics
The Bank of England is tasked with keeping inflation, measured by the main Consumer Price Index (CPI), at around 2%, which gives the monthly publication its importance. A rise in inflation means an increasingly rapid rise in interest rates or a reduction in bond purchases by the BOE, which means squeezing the supply of pounds. On the contrary, a drop in the pace of price increases indicates a more flexible monetary policy. A higher than expected result tends to be bullish for the GBP.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
