Mario Blascak, PhD
Independent Analyst
- 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.
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
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