GBP/USD Forecast: Bulls move to sidelines ahead of US December CPI
- GBP/USD went into a consolidation phase above 1.2750 following Wednesday's rebound.
- Monthly core inflation in the US is forecast to rise 0.3% in December.
- Market mood remains upbeat in the European session on Thursday.
GBP/USD went into a consolidation phase above 1.2750 early Thursday after closing in positive territory on Wednesday. Although the upbeat market mood helps the pair hold its ground in the European session, investors could refrain from taking large positions ahead of the highly-anticipated US inflation report for December.
Pound Sterling price this week
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies this week. Pound Sterling was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.29% | -0.37% | 0.07% | 0.04% | 0.47% | -0.06% | -0.01% | |
| EUR | 0.29% | -0.07% | 0.37% | 0.34% | 0.77% | 0.24% | 0.27% | |
| GBP | 0.36% | 0.05% | 0.42% | 0.39% | 0.82% | 0.30% | 0.33% | |
| CAD | -0.07% | -0.36% | -0.44% | -0.03% | 0.42% | -0.13% | -0.09% | |
| AUD | -0.04% | -0.33% | -0.38% | 0.03% | 0.45% | -0.09% | -0.05% | |
| JPY | -0.50% | -0.76% | -0.85% | -0.39% | -0.42% | -0.53% | -0.50% | |
| NZD | 0.06% | -0.25% | -0.30% | 0.12% | 0.08% | 0.52% | 0.03% | |
| CHF | 0.01% | -0.28% | -0.35% | 0.09% | 0.06% | 0.49% | -0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Wall Street's main indexes gathered bullish momentum mid-week and made it difficult for the US Dollar (USD) to find demand. US stock index futures were last seen rising between 0.3% and 0.5%, while the UK's FTSE 100 Index was up 0.5%, suggesting that risk flows continue to dominate the action in the European morning.
The US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data for December. Investors are likely to react to the monthly Core CPI reading, since it's not distorted by base effects and strips volatile food and energy prices.
On a monthly basis, the Core CPI is expected to rise 0.3% in December to match November's increase. A softer-than-forecast core inflation print could revive expectations about a Federal Reserve (Fed) policy pivot in March and force the USD to continue to weaken against its rivals. On the flip side, a stronger-than-expected increase in the Core CPI could cause markets to turn cautious and make it difficult for GBP/USD to build on Wednesday's gains.
GBP/USD Technical Analysis
GBP/USD returned within the ascending regression channel and the Relative Strength Index (RSI) indicator on the 4-hour chart advanced to 60, highlighting a bullish tilt in the short-term technical outlook.
On the upside, 1.2800 (psychological level, static level) aligns as next resistance before 1.2830 (December 28 high) and 1.2860 (mid-point of the ascending channel).
First support is located at 1.2750 (lower limit of the ascending channel) before 1.2700 (100-period Simple Moving Average (SMA), psychological level) and 1.2670 (200-period SMA).
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
