Key Highlights
- The British Pound recently made a short-term top at 1.4080 against the US Dollar.
- There is a crucial bullish trend line in place with support at 1.3950 on the 4-hours chart of GBP/USD.
- The UK CPI in Feb 2018 increased 0.4%, less than the forecast of +0.5% (MoM).
- Today, the UK Claimant Count Change for Feb 2018 will be released, which is forecasted to post -5K.
GBPUSD Technical Analysis
The British Pound climbed earlier this week and moved above 1.4000 against the US Dollar. The GBP/USD pair failed to move past 1.4080-1.4100 and started a downside correction.
It declined and tested the 50% Fib retracement level of the last wave from the 1.3889 low to 1.4088 high. However, there are many supports on the downside around the 1.3950-60 levels.
There is also a crucial bullish trend line in place with support at 1.3950 on the 4-hours chart. Furthermore, the 200 simple moving average (green, 4-hours) is at 1.3935, which is also a major support.
More importantly, the 61.8% Fib retracement level of the last wave from the 1.3889 low to 1.4088 high is at 1.3965. Therefore, the 1.3950-1.3960 area is a decent support region.
As long as the pair is above the 1.3950 level, it remains supported for more gains. On the upside, the pair may find is difficult to break the 1.4080 and 1.4100 resistance levels.
Recently in the UK, the Consumer Price Index (CPI) for Feb 2018 was released by the Office for National Statistics. The market was looking for a 0.5% rise in Feb 2018 compared with the previous month.
The real outcome was a bit below the forecast as the CPI increased by 0.4%. In terms of the yearly change, there was a rise of 2.7%, less than the forecast of 2.8% and previous 3%.
The report added that:
The largest downward contributions to the change in the rate came from transport and food prices, which rose by less than a year ago. Falling prices for accommodation services also had a downward effect. Rising prices for footwear produced the largest, partially offsetting, upward contribution.
Overall, the GBP/USD pair may consolidate above 1.3950 for some time before making the next move. However, today’s UK CPI release and the Fed interest rate decision could impact pairs like EUR/USD, GBP/USD, USD/JPY and AUD/USD in the near term.
Economic Releases to Watch Today
- UK Claimant Count Change Feb 2018 – Forecast -5.0K, versus -7.2K previous.
- UK ILO Unemployment Rate Jan 2018 (3M) – Forecast 4.4%, versus 4.4% previous.
- US Existing Home Sales for Feb 2018 (MoM) – Forecast +0.5%, versus -3.2% previous.
Feb Interest Rate Decision – Forecast 1.75%, versus 1.5% previous.
