- The pound sterling holds a bearish bias as the dollar benefits from its renewed safe-haven demand.
- Analysts suspect the Pound could revive its bullish momentum if the US CPI data turns out softer.
- Traders look forward to the US CPI and comments from President Trump for further policy cues.
The GBP/USD outlook shows the pair under pressure, trading below the 1.3340 level after four consecutive losing streaks. The US Dollar Index stood around 99.07, supported by cautious sentiment as traders await today’s US CPI report release.
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Market prices are at 0.4% MoM and a 3.1% annual rise in inflation. A stronger reading could revive the dollar’s safe-haven demand while hurting the GBP/USD sentiment.
In the UK, the September Retail Sales data revealed a 0.5% MoM increase, against a forecast of 0.2% decline. However, the pound sterling is still weighed down as investors focus on the BoE’s rate cut expectation.
Earlier this week, the weak inflation reinforced expectations of one rate cut by the BoE in December. Meanwhile, comments from MPC member Swati Dhingra reinforced further BoE easing amid the ongoing disinflation trends.
On the other hand, the US faces ongoing fiscal uncertainty as the Federal shutdown now enters its 24th day, benefiting from its safe-haven appeal and higher yields. Brown Brothers Harriman analysts note that while UK inflation cuts down risks of economic stagnation, the pair maintains a broader bearish momentum unless the US inflation release turns out softer than expected.
GBP/USD Daily Key Events
The major events in the day include
- US CPI m/m
- US CPI y/y
- President Trump speaks
- Retail Sales m/m
- Flash manufacturing PMI (for both GBP and USD)
- Flash Services PMI (for both GBP and USD)
Traders await the key US CPI releases and President Trump’s speech for further monetary policy direction.
GBP/USD Technical Outlook: Bearish Momentum Below Key MAs
The GBP/USD 4-hour chart shows the pair trading around 1.3320, struggling to stay above the key moving averages. The price remains well below the 100- and 200-MAs, highlighting a bearish bias. However, a consolidation around 20-MA shows a probability to swing higher.
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The RSI is at 39, suggesting the sellers have regained control. If the pair witnesses a break above the 1.3370 level, a short-term rebound is expected towards the 1.3400 and 1.3450 levels before a further downtrend. Conversely, a renewed selling interest may emerge if the pair drops below the 1.3300 level.
Support Levels
- 1.3300 (round number)
- 1.3260 (swing low)
- 1.3200 (major support)
Resistance Levels
- 1.3350 (immediate resistance, 20-MA)
- 1.3400 (round number)
- 1.3450 (200-MA)
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