Triangle Spotted on GBPUSD; Is A Breakout Imminent?

Despite yesterday’s top-tier inflation reports from the UK, GBPUSD traded within a tight 37-pip range. The currency pair opened at 1.2842 and spent most of the day trading around 1.2830 before closing at 1.2847.

Yesterday’s CPI report showed that overall consumer prices in the UK only rose by 1.5% in October compared to a year ago. The headline CPI figure missed expectations which called for a 1.6% uptick in prices. This is the lowest that level that UK inflation has been in the past three years! A closer look at the report shows that the lower energy price cap drove utility prices down.

Meanwhile, the core CPI report which excludes volatile items like petrol and energy, posted a 1.7% increase as expected. Often this number is considered more important because it disregards outliers.

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Retail Sales Due Today

Later this morning at 9:30 am GMT, retail sales report for October will be released. It is expected to show that consumer spending rose by 0.2% for the month.

A positive figure is usually bullish for the pound. However, it’s worth noting that the currency has seen muted responses to economic data since the start of the week. In fact, the biggest move that we saw on the pound was on Monday when Brexit Party leader Nigel Farage made an announcement of no-contention to Tory Party seats. This has in turn led to Conservatives incurring a 14-point lead over Labour in yesterday’s polls. With this said, it’s most likely that the pound will continue to take its cue from political news in today’s trading.

GBPUSD Outlook

GBPUSD has been consolidating for the most part of the week and the hourly chart shows that it has formed a symmetrical triangle. A stronger pound could push the currency pair up and make a run for the neckline resistance of the inverse head and shoulders I pointed out yesterday at 1.2876. On the other hand, a stronger dollar could force a downside break and push GBPUSD to its November 8 lows at 1.2769.Download our latest quarterly market outlook for our longer-term trade ideas.

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