GBP/USD has experienced a significant decline, approaching the level of 1.3060, as investors redirect their attention to the forthcoming release of th
GBP/USD has experienced a significant decline, approaching the level of 1.3060, as investors redirect their attention to the forthcoming release of the United Kingdom Consumer Price Index (CPI) data. This data is scheduled to be unveiled on Wednesday at 06:00 GMT.
As investors anticipate the likelihood of sustained high core inflation, the GBP/USD pair has witnessed a decline. They hope that this trend would prompt the Bank of England (BoE) to persist with its assertive policy-tightening measures, with the aim of bringing inflation back to the desired levels. Consequently, such a scenario would potentially dampen the economic prospects of the British economy.
Despite being left with no alternative, the central bank of the United Kingdom would be compelled to raise interest rates even higher. However, this would place a burden on households as they contend with elevated borrowing costs and the challenges posed by soaring inflation
In addition to major purchases, the housing sector also bears the weight of inflationary pressures. Concerns have arisen within the UK’s corporate sector, as they perceive that the surge in business optimism witnessed during the spring season has waned due to the impact of inflation and the upward trajectory of interest rates.
According to consensus estimates, the monthly headline Consumer Price Index (CPI) is projected to show a slower pace of 0.4%, compared to the previous rate of 0.7%. Furthermore, the annualized inflation rate is expected to decelerate to 8.2%, down from the previous release of 8.7%.
However, it is worth noting that core inflation, which excludes volatile oil and food prices, is anticipated to remain unchanged at elevated levels of 7.1%.
GBP/USD Technical Analysis
The Pound Sterling has recently undergone a marginal correction, testing the resilience of the breakout from the Rising Channel chart pattern observed on a daily timeframe.
The breakout of the mentioned chart pattern signals strong upward momentum, highlighting the robustness of the Pound Sterling bulls. This is further supported by the upward trajectory of short-to-long-term period Exponential Moving Averages (EMAs), indicating a solid bullish stance for the currency.
On the other hand, the current market analysis reveals a mix of signals across various indicators, oscillators, and moving averages. The indicators present a somewhat balanced outlook, with 4 indicating a sell sentiment, 6 in a neutral position, and a significant number of 15 indicators leaning towards a buy stance.
Looking specifically at the oscillators, there are 3 indicating a sell signal, 5 suggesting a neutral position, and 3 oscillators pointing towards a buy signal. This indicates a somewhat cautious sentiment among traders, with a notable presence of neutral signals.
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