GBP/USD Forecast: About to challenge this year low
|GBP/USD Current Price: 1.2912
- UK inflation picked up in January, bringing additional relief to the BOE.
- EU representatives were unable to agree on a definition of a level playing field for the UK.
- GBP/USD bearish and set to pierce the year low at 1.2871.
The GBP/USD pair peaked at 1.3023 during the European session, supported by the better market mood and upbeat UK inflation figures. According to the official report, the Consumer Price Index was up by 1.8% YoY in January, better than the previous 1.3% and beating expectations of 1.6%. Core annual CPI printed at 1.8%, surpassing the expected 1.6%. Also, the PPI output in the same month was above forecasted, hitting 1.1% YoY.
GBP/USD gains were short-lived amid broad dollar’s demand, with the decline later exacerbated by news indicating that representatives of the 27 EU member states were unable to agree on the definition of a level playing field, the degree of UK alignment that Brussels will require from London for easy market access. The UK will release this Thursday, January Retail Sales, seen up by 0.7% after declining by 0.6% in the previous month. The kingdom will also publish the CBI survey on orders, seen at -19 from -22.
GBP/USD short-term technical outlook
The GBP/USD pair has fallen, nearing the 1.2900 level as the US session comes to an end. The 4-hour chart shows that the decline accelerated after repeated failure to recover beyond its moving averages, which now gain strength downward far above the current level. Technical indicators have pared their declines after reaching oversold readings, without signalling an upcoming bounce. The year low was set at 1.2871, the next relevant support and the level to break to confirm a steeper decline during the upcoming sessions.
Support levels: 1.2905 1.2870 1.2830
Resistance levels: 1.2945 1.2990 1.3040
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