GBP/USD Forecast: Pound weak ahead of UK inflation report

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.3032

UK PM Johnson believes a trade deal can be achieved with the EU by year-end.
UK annual inflation seen at 1.5% in December, matching the previous estimate.
GBP/USD recovering some ground, but at risk of falling further.

The GBP/USD pair recovered from a fresh multi-week low of 1.2954, as the greenback weakened, initially weighed by risk-averse headlines related to the US trade relationship with its European counterparts. The Pound retained its gains amid renewed demand for high-yielding assets during the American afternoon, as Wall Street rallied on the back of solid earnings reports. The Sterling benefited from comments from UK PM Johnson, who said that he considers “very likely” the kingdom will get a “comprehensive trade deal with the EU by year-end.”

Among other things, PM Johnson said that he cannot agree to any “request for a transfer of power that would lead to further independence referendum,” referring to Scottish PM Sturgeon’s request to hold another Scottish independence referendum. This Wednesday, the UK will release December Inflation figures. The annual CPI is foreseen at 1.5% in December, while the core reading is expected to print 1.7%, both matching the previous estimates.

GBP/USD short-term technical outlook

The GBP/USD pair recovered and settled above the 1.3000 figure, although the short-term picture indicates that the risk is skewed to the downside, as the pair remains below the 23.6% retracement of its latest daily decline at 1.3050. In the 4-hour chart, the pair is currently battling with its 20 SMA, and below the larger ones, while technical indicators head nowhere just below their midlines.

Support levels: 1.2995 1.2960 1.2925

Resistance levels:1.3050 1.3100 1.3140

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.