GBP/USD Outlook

GBP/USD seems to be in the spotlight this week, with all the major UK data coming out this week.We had PPI on Monday which printed 2.6% beating the expectation of 1% .

Then We had the CPI Data Yesterday, which printed blow expectations at 2.2%, while Core CPI is very disappointing @1.3%.

RICS House Price Balance Fell further to -54.7% from the previous Survey at -49.1%

So What’s in Store for the Cable today???

We have earnings and unemployment report out today but everyone will probably be waiting for the BOE Inflation Report. Despite all the ugly data out for UK, The BOE is hawkish in regards to inflation, we would probably be expecting a Hawkish Statement from BOE today.

If i remembered correctly, Governor King mentioned last month that they seems to be in a dilemma in maintaining the inflation level and the slowdown in the economy. Inflation levels still need to be maintained all the while economic slowdown is happening in the UK.

BOE decision to cut rate last week is probably there, to go ahead of the curve to maintain the slowdown in the economy. Further Rate Cut will depend on the inflation report today.

My personal Thoughts on this would be a hawkish comment from the BOE and rate cuts won’t be coming as quickly, A hold Next month is very likely.

Fundamental aside let’s look at the Technicals for today.

Let’s check the daily Chart. Down trend Channel mentioned in the previous reports still exists. Stochastic level coming out from the oversold level, probably due to the boost from monday’s PPI data Triggered a move up, most probably a correction, for the Cable to test the Down Trendline, Possibilty of price hitting the area i labeled on the chart is there.
Overall Long term situation, as long as Price hasn’t break out of the channel, Cable is still Bearish.

On the other hand H1 Shows a possible Bullish Divergence, all now depends on the Market reaction and Anticipation of the BOE Inflation Report, Things look Bullish for today, and Cable does need a correction pullback should it wish to continue the move Down.

But are we seeing the Bottom for Cable at 1.9380???

Resistance Levels

1.9673 — R1 Daily
1.9740 — R2 Daily
1.9865 — R3 Daily

Support Levels

1.9556 — Daily Pivot
1.9481 — S1 Daily
1.9364 — S2 Daily