- Discover how the recent UK inflation data influences GBP/USD. Our article provides a detailed technical outlook for the currency pair.
The currency pair GBP/USD slips immediately once the UK inflation data is released. The softer-than-expected data and employment concerns raise the potential of an interest rate cut by the BOE on Thursday.
This article covers the release of the UK inflation data, its impact on the GBP/USD, and the technical outlook of the pair. Additionally, it addresses the expectations of the BOE decision regarding the monetary policy meeting scheduled for Thursday.
The Release of the UK Consumer Price Index:
The UK consumer price index rose more softly than expected. The CPI figures for November came 3.2% over the year, compared to 3.6% in October. Market predictions were a 3.5% growth in the reported period. The released data came above the Bank of England‘s 2% inflation target.
Moreover, the core CPI rose 3.2% YoY in the same period, and the previous month was 3.4% which means that it’s softer than the previous and forecasts of 3.4%.
GBP/USD Price Reacted Following UK Inflation Data:
The price action shows that the GBP/USD is trading within a well-defined range after failing to sustain gains above recent highs. On the upside, the pair faces strong resistance around 1.3380-1.3430. This zone aligns with the upper Bollinger band.
A decisive breakout above this area could pave the way toward 1.3450, signaling renewed bullish momentum. However, repeated rejection near this zone suggests upside potential remains capped unless a clear bullish catalyst emerges.
On the downside, the key support is located near 1.3325-1.3310, where the price found temporary consolidation. A break below this support could expose the pair to a deeper pullback toward 1.3285-1.3250. This zone aligns with the lower Bollinger band, and it is considered a key demand zone. A clear break below it would weaken the bullish momentum, getting to lower levels.
The RSI supports the cautious outlook, as the RSI dipped toward the lower half of the range. It indicates increasing bearish pressure. This suggests that there is still room for further downside.
Investor Expectations Ahead of the BoE Policy Decision
The UK inflation data released today by the Office for National Statistics (ONS) shows a cooling of inflationary pressures. On the other hand, the labor market concerns are rising. With that, the hope of cutting the interest rate by the BOE is rising. Investors are closely watching the UK monetary policy meeting on Thursday.
The BOE’s rate decision influences the pound’s yield outlook. This can strengthen or weaken the GBP against the US dollar. It depends on whether the stance is howkish or dovish.
GBP/USD tends to be volatile because traders typically adjust their positions based on changes in interest rate expectations.
With the softer-than-expected UK consumer price index data and rising labor market concerns, market expectations are pointing to a potential interest rate cut by the BOE on Thursday.
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