September 28, 2022
  • September 28, 2022

Bears under control ahead of UK inflation

By on September 14, 2022 0

The four-hour chart shows that the GBP/USD pair has been in a strong bearish trend over the past few weeks.

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Bearish view

  • Sell ​​the GBP/USD pair and set a take-profit at 1.1400.
  • Add a stop-loss at 1.1615.
  • Lead time: 1-2 days.

Bullish view

  • Set a buy-stop at 1.1570 and a take-profit at 1.1650.
  • Add a stop-loss at 1.1450.

GBP/USD price erased gains made earlier this week after strong US inflation and UK employment data. The focus is now on the upcoming US Producer Price Index (PPI) and UK inflation figures. It fell to a low of 1.1500, which was the lowest level since September 9th.

UK and US inflation data coming soon

GBP/USD fell after the latest UK jobs data. The figures showed that the country’s labor market is still strong, with the unemployment rate dropping to 3.6%. Wages continued to rise as the market tightened. Excluding bonuses, wages jumped from 4.7% to 5.2% in July. Including bonuses, salaries increased by 5.5%.

The pair then fell sharply after the US released the latest inflation data. The data revealed that the country’s inflation rose by 8.3% year-on-year, which was above the median estimate of 8.1%. It increased by 0.1% compared to the previous month.

The core consumer price index rose 0.6% from July and 6.3% from the same period in 2021. This increase was mainly due to soaring prices for housing, food and medical care. So, while the price of gasoline has fallen slightly, consumers are still suffering from the price spike.

Therefore, the view of the financial market is that the Fed will make another 0.75% rate hike at its meeting next week. It will then pivot to a smaller 0.50% in the final meetings of the year. The United States will release the latest US producer inflation data later today.

The other key catalyst for GBP/USD will be the latest UK inflation data. Analysts expect UK inflation to continue to rise as petrol prices remain high. The headline CPI is expected to reach 12.3% while the core CPI will increase to 6.3%.

GBP/USD Forecast

The four-hour chart shows that the GBP/USD pair has been in a strong bearish trend over the past few weeks. It fell below the standard pivot point at 1.1550. Furthermore, the pair broke below the 25 and 50 day moving averages and the vital support level at 1.1613. The MACD and the Relative Strength Index (RSI) are pointing down.

Therefore, the pair is likely to continue lower as sellers target the next key support at 1.1400. The stop-loss for this trade will be at 1.1615.

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