GBP/USD Plunges On Worse Than Expected Inflation Figures


Great Britain Pound (GBP) extended downside movement against the US Dollar (USD) on Tuesday, dragging the price of GBP/USD to less than 1.6960 following the downbeat Consumer Price Index (CPI) report. The sentiment however remains positive due to Higher High and Higher Low in the recent wave.

Technical Analysis

As of this writing, the pair is being traded near 1.6957. A hurdle can be noted around 1.7010, the intraday high of yesterday ahead of 1.7043 which is the 161.8% fib level. The sentiment will remain bullish as far as the 1.6692 support area is intact.


On the downside, the pair is expected to find a support near 1.6820, the 23.6% fib level ahead of 1.6800, the psychological number and 55 Simple Moving Average (SMA) and then 1.6720 which is the 38.2% fib level as demonstrated in the above chart. Not to mention, the pair might also form a double top pattern on the daily chart.

Britain Inflation

The CPI—a main gauge for inflation—slowed down in Britain to 1.5% in May as compared to 1.8% in the same month of the year before, a report from the National Statistics department revealed today. Similarly, the CPI declined by 0.1% last month as compared to 0.4% increase in the month before, the report added. Generally speaking, higher inflation is seen as positive for a developed economy like UK so the downbeat actual readings spurred selling pressure in cable.

BoE Monetary Policy Outlook

The Bank of England (BoE) has made clear that the central bank will not increase the benchmark interest rate for a considerable period of time in order to strengthen the recent growth in the economy. Major slowdown in inflation might prompt policymakers to increase the time period before the first rate hike.


Considering the overall technical and fundamental outlook, selling the pair around the current levels could be a good option, a tight stop loss should however be placed at the intraday high of yesterday.

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