GBP/USD Forecast: Sterling slides in the downward sloping channel capped by 1.2755

The GBP/USD is trading below at the brink of 1.2700 after the UK inflation accelerated in July.
The emerging market rout linked with Turkish Lira eased somewhat, but the US Dollar as the classic safe haven remained well supported.
The UK headline inflation accelerated to 2.5% y/y in July with core inflation remaining stagnant at 1.9% y/y.

Mario Blascak, PhD Independent Analyst

The GBP/USD remains under selling pressure stuck close to 1.2700 level against the US Dollar after falling as low as 1.2691 overnight marking fresh 14-month low.

The UK headline inflation accelerated to 2.5% over the year in July, up from 2.4% y/y from June, but the core inflation remained stable at 1.9% y/y. Rising prices for computer games and transport fares produced the largest upward contributions to UK inflation from June to July 2018.

The GBP/USD is trapped in the downward sloping trend channel and as the currency pair broke below 1.2755 representing 100% retracement of the move from 1.2755 to a cyclical high of 1.4377 reached on April 12 this year, the new low of below 1.2700 is the next target.

Technical oscillators on 1-hour chart including Momentum, the Relative Strength Index, and Slow Stochastics have all moved to the neutral territory and wait for the decisive move. The GBP/USD is prone to move lower with 1.2700 being the immediate support on the downside. Break below 1.2700 would open the way for 1.2600. On 4-hour chart though, the GBP/USD is at the lower boundary of the downward sloping trend channel indicating short-term recovery towards 1.2755 level.

GBP/USD 1-hour chart

GBP/USD 4-hour chart

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Bla&scaron;čák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

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