The GBP/USD is in a tight range as traders wait for the important Fed decision, flash PMIs, and UK inflation data. They are also focused on the ongoing game of chicken about Brexit. The pair is trading at 1.3461, which is slightly below this week’s high of 1.3538.
UK CPI: Yesterday, the ONS released mixed UK jobs numbers. Today, the office will publish the November consumer price index (CPI) data. Economists expect the data to show that the overall CPI increased by 0.1% in November leading to an annualised gain of 0.6%. They also see the core CPI rising by 0.2% and an annualised rate of 1.4%. These two are well-below the BOE target of 2%.
UK flash PMIs: The GBP/USD will also react to the latest flash manufacturing and services PMIs. Analysts believe that the services PMI will move back to the expansionary zone of 50.5 while the manufacturing PMI will jump to 55.9. This is partly because of the fact that the country eased its restrictions slightly in November.
Fed decision: The GBP/USD is little changed ahead of the Fed decision. As we wrote earlier, we don’t expect the Fed to make any changes to its policies during this meeting. But the overall tone could have an impact on the pair.
GBP/USD technical outlook
What next for the pound? On the daily chart below, we see that the GBP/USD has formed an ascending channel. It is now approaching the upper side of the channel and is still above the 25-day and 15-day smoothed moving average. Therefore, the path of least resistance for the pair is still higher, with the next target being at 1.3540.
GBP to USD chart