FXOpen
The Pound fell nearly 180 pips after topping at 1.5387 against the US Dollar, as the UK inflation unexpectedly plunges below zero. The release of September CPI data showed that inflation fell by 0.1% compared to a year before, being this the second time inflation goes negative in the last 55 years.
Technical Analysis
The GBP/USD pair traded as low as 1.5199 a fresh 5-day low before bouncing some, so far unable to regain the 1.5260 level, a strong static resistance.
In short term, the 1 hour chart shows that the technical indicators have bounced strongly from extreme oversold levels, but lost upward strength below their mid-lines, maintaining the risk towards the downside.
In the same chart, the 20 SMA heads strongly lower a few pips above the mentioned resistance level. In the 4 hours chart, the technical indicator have also turned north from near oversold levels, but remain well below their mid-lines, whilst the 20 SMA is gaining bearish slope far above the current level.
Overall, the downward risk prevails, particularly on renewed selling interest below 1.5230 the 23.6% retracement of the latest weekly decline.
UK Inflation
Inflation as measured by the Consumer Prices Index fell to -0.1% in September, official figures have shown.
The Office for National Statistics (ONS) said that a smaller than usual rise in clothing prices, and falling motor fuel prices, were the main contributors to the drop in the rate.
The CPI rate has been at or close to zero for most of this year. It was last in negative territory in April.
Trade Idea
Considering the overall technical and fundamental outlook, buying the pair could be a good strategy if we get a valid bullish reversal candle on daily chart.
Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Stay ahead of the market!
Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.
Latest articles
XBR/USD Chart Analysis: Price Rebounds from a Seven-Week Low
On 1 December, we outlined a descending channel on the XBR/USD chart and noted that the bearish trend was driven by fading geopolitical risks. Indeed, hopes for an end to the war in Ukraine—along with the possibility of
Silver Price Hits Historic Record Around $64
On 27 November, we suggested that silver was preparing to challenge its all-time high. Since then (marked with the orange arrow), XAG/USD has risen by roughly 18%, breaking above the psychological $60-per-ounce threshold for the first time in history.