Back to the Blog Main Page
16/10/24
56
GBP/USD Range-Bound as Traders Await Key Inflation Data
The GBP/USD currency pair has been trading within a consistent range in recent days, currently hovering around the 1.3070 – 1.3075 level. Traders appear to be adopting a cautious approach as they await critical consumer inflation data from the UK, which could significantly influence market dynamics.
Concerns regarding a potential acceleration in the Bank of England’s rate-cutting strategy are weighing on the British Pound, creating headwinds for the GBP/USD pair. Additionally, a slight decrease in the value of the US Dollar provides some support for the British currency, helping to mitigate further downside pressure.
From a technical viewpoint, the ongoing range-bound movements suggest a bearish trend, especially considering the recent retreat from the peak around 1.3435, which was the highest level since March 2022. Key indicators on daily charts remain in negative territory, indicating that further declines in the GBP/USD pair may be likely. A drop to the 1.3020 level, which was reached last Thursday, is anticipated, potentially progressing toward the psychological level of 1.3000. Further declines could see the pair approach the 100-day Simple Moving Average located in the mid-1.2900s.
On the upside, the 1.3100 level presents a significant resistance level, with the 1.3125 zone following closely behind. A sustained breakthrough above these levels could open the door for a short-covering rally, potentially pushing GBP/USD toward the 1.3200 level and beyond, to the area near 1.3235 – 1.3240.
The upcoming release of the UK Consumer Price Index (CPI) will be crucial, as it measures inflation and is closely monitored by the Bank of England. An increase in consumer prices could prompt expectations for sooner interest rate hikes or a tapering of asset purchases by the central bank, thus tightening GBP supply. Conversely, lower inflation figures could signal a more accommodative monetary policy, affecting the Pound’s outlook negatively. A higher-than-expected inflation reading generally favors a stronger British Pound.
Promotions
