The British pound is headed for its second consecutive day of losses against the US dollar, with the GBPUSD pair losing -0.42% to trade at 1.2539 at 10.05 GMT on Wednesday. The pound’s latest red candlestick comes on the heels of back-to-back inflation data from the US and the UK, all in favour of the US dollar.
GBPUSD went down by 0.28% on Tuesday as it cracked under pressure from the higher-than-expected January US Core Consumer Price Index (CPI) figure. The US Core CPI for January 2024 stood at 3.5%, against a projected 3.4%. This dashed hopes of a downward reversal of US interest rates in March, thus strengthening the greenback.
GBP bulls had hoped that Wednesday’s release of the UK’s own CPI data would bring some reprieve, but that, too, has backfired. The UK Office for National Statistics announced on Wednesday morning that the country’s inflation rose 4.0% in the one-year period to January 2024, slightly less than the projected 4.1%. Similarly, the figure monthly figure for January stood at -0.6% lower than the consensus forecast -0.3%. These figures form a basis for the Bank of England (BOE) to lower interest rates, creating a bearish sentiment around the pound. BOE Governor Andrew Bailey is scheduled to speak at 03.00 pm GMT on Wednesday, and his statement will provide cues on the next course of action.
The GBPUSD pair has much more lined up on Thursday, starting with the release of the UK’s GDP figures for Q4 2023 and December 2023. Furthermore, data on the January US Continuing Jobless Claims, Core Retail Sales, and the February Philadelphia Fed Manufacturing Index will be out tomorrow. All these statistics will have varying levels of impact on the GBPUSD trading pair.
Technical Analysis
The RSI is below the neutral level and favours downside momentum, with the pivot at 1.2630. This will likely see the GBPUSD rate head down to find the first support at 1.2540, beyond which it could test 1.2515. However, the pair could make marginal gains if it stays above 1.2630. This could provide the momentum to push upward toward the first resistance at 1.2655. Further bullish control could breach the resistance and potentially touch 1.2680.
GBPUSD on a 30 minute chart