Key Highlights
- The British Pound declined recently, but the 1.3760 support prevented further declines against the US Dollar.
- There is a major expanding triangle forming with support near 1.3680 on the 4-hours chart of EUR/USD.
- The UK Consumer Price Index increased 3% in Jan 2018, more than the forecast of 2.9% (YoY).
- In terms of the monthly change, there was a decline of 0.5% in the CPI in Jan 2018.
GBPUSD Technical Analysis
The British Pound declined sharply from the 1.4270 swing high against the US Dollar. The downside move in GBP/USD was protected by 1.3760, which is a major support.
The last decline in GBP/USD was more than 400 pips. The pair made a top near 1.4270 and declined below the 1.4000 support. The downside push was strong as the pair even traded below the 1.3920 support and settled below the 100 simple moving average (red, 4-hours).
However, the 1.3750-60 region acted as a major hurdle for more declines along with the 200 simple moving average (green, 4-hours). A base was formed and the pair started a recovery above the 1.3800 level.
On the upside, the pair faces a strong resistance near 1.4000-1.4020. It is the 50% Fib retracement level of the last decline from the 1.4273 high to 1.3766 low. Moreover, the stated 1.4020 was a support earlier and now it will most likely act as a resistance.
Overall, it seems like is a major expanding triangle forming with support near 1.3680 on the 4-hours chart. The pair may trade higher in the short term, but it could face sellers near 1.3960 and 1.4000.
UK CPI
Recently in the UK, the Consumer Price Index for Jan 2018 was released by the National Statistics. The market was looking for an increase of 2.9% in the CPI in Jan 2018 compared with the same month a year ago.
The actual result was on the higher side as the CPI increased 3.0%. The monthly change was -0.5%, less than the forecast of -0.6. The report added:
The largest downward contribution to change in the rate came from prices for motor fuels, which rose by less than they did a year ago. The main upward effect came from prices for a range of recreational and cultural goods and services, in particular, admissions to attractions such as zoos and gardens, for which prices fell by less than they did a year ago.
The GBP/USD pair spiked a few pips before retreating. The overall trend remains stable as long as the pair is above 1.3750.
Looking at the other major pairs, EUR/USD succeeded in recovering and moved above 1.2280. More importantly, USD/JPY tumbled and moved below a crucial support at 108.20.
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