The GBP/USD pair is wavering ahead of the important UK inflation numbers that will come out at 07:00 GMT. The GBPUSD is trading at 1.3886, which is slightly above the overnight low of 1.3864.
GBPUSD news: The British pound has been on an uptrend in the past few months as investors react to the optimism of Brexit and the UK vaccination program. This has seen it soar to the highest level in almost three years.
Yesterday, however, the GBP/USD pair declined as investors continued to price-in more US stimulus that will likely lead to higher inflation. Data released last week showed that consumer prices rose by 1.4% in January pushing many traders to predict that the overall CPI will rise to 2.0% later this year.
Today, the focus will be on the UK CPI numbers and US retail sales data. Analysts expect the data to show that the UK inflation rose by 0.6% while the headline US retail sales rose slightly in January.
GBP/USD technical forecast
The GBP/USD price declined yesterday to an intraday low of 1.3860. On the hourly chart, this price was along the 23.6% Fibonacci retracement level. The pair also seems to be forming a small bearish flag pattern. Therefore, I suspect that the pair will resume the downward trend as bears target the next support level at 1.3800, which is the 38.2% Fibonacci retracement level. However, a move above 1.3900 will invalidate this trend.