GBP/USD Forecast: descending trend-line capping gains ahead of UK budget release and US CPI
|The US Dollar weakened further at the start of a new trading week and was being weighed down Friday's jobs report, which showed a slack in real wage growth and dampened expectations of aggressive Fed rate hikes in 2018. The GBP/USD pair continued gaining traction for the second consecutive day and was further boosted by positive Brexit news that the UK is very close to transition deal with the EU.
Bulls, however, once again struggled to sustain/build on the momentum beyond the 1.3900 handle as the focus now shifts to the latest US consumer price inflation figures, which should influence Fed rate hike expectations and eventually drive the greenback in the near-term. Ahead of the key event risk, the UK Annual Budget Release, which will include updated growth and inflation forecasts, should help traders grab some short-term momentum play.
Technically, the pair once again failed near a short-term descending trend-line resistance and now seems to extend the retracement slide towards mid-1.3800s. A follow-through selling pressure might now turn the pair vulnerable to break below the 1.3800 handle and head towards testing the 1.3765-55 strong horizontal support.
On the flip side, bulls might continue to struggle near the descending trend-line resistance, currently around the 1.3910-20 region, which if conquered now seems to trigger a short-covering rally and assist the pair to head back towards reclaiming the key 1.40 psychological mark.
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