GBP/USD turns bearish after UK inflation data comes out today!
In case you missed it, the UK’s annual rate of inflation came in at 8.7% in May, unchanged from the April rate but above expected consumer price growth of 8.4%.
It also marks the fourth consecutive month that annual prices have risen more than markets had anticipated.
Not good for the Bank of England (BOE), which is doing its best to stabilize prices after inflation peaked at 11.1% in October.
GBP/USD 15-minute forex Planned by TV
The prospect of a rate hike from the Bank of England initially boosted the pound against its major peers.
But some traders are now speculating that Governor Bailey and his team will have little choice but to push interest rates higher, which also increases the odds of a UK recession. withers!
The GBP/USD pair, which jumped to the psychological handle at 1.2800, fell to 1.2760 levels.
Does this mean that Cable is heading towards new lows during the day?
It does not help the GBP bulls that the psychological level of 1.2800 is not far from the 200 SMA on the 15-minute chart as well as the trend line resistance that has been present all week.
Besides, the move to 1.2800 is kinda a half-track Average daily fluctuations in the GBP/USD pair.
Between expectations of a possible recession in the UK and the expectation of at least some tightening from Powell’s later testimony, I’m betting on GBP/USD to extend its downtrend through the week.
I look for entries between 1.2775 – 1.2780 trendline and the 200 SMA resistance area while targeting GBP/USD weekly lows near S1 levels (1.2720) today.
what do you think? Will GBP/USD Extend Its Downtrend?
Or will the BoE’s hawkish outlook push GBP/USD to new weekly highs?
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