- Summary:
- In this GBP/USD forecast, we explain why the GBP to USD pair could drop further to 1.3740 in the near term ahead of the US CPI numbers
The GBP/USD price is under pressure today as the market continues to focus on the US and UK bond market. The GBPUSD is trading at 1.3850, which is substantially below the year-to-date high of 1.4242.
What happened: The recent GBP to USD rally has faded as concerns mount about the state of the bond market. That’s because the yield on US and UK bonds have jumped significantly in the past few weeks.
The 10-year US Treasury yields have risen to the highest level in more than 12 months. Similarly, the 10-year UK Gilts have rallied. Therefore, the US CPI data scheduled for later today could have a major implication on the pair.
If the data comes out strong, it could put the Fed in a challenging situation since the unemployment rate is still high. In general, economists expect the data to reveal that the headline US CPI rose by 1.7% in February and that the trend will continue.
GBP/USD technical forecast
On the four-hour chart, we see that the GBP to USD price rally has faded in the past few weeks. The price has even declined by more than 2.75% from its highest level this year. Also, it has moved below the 25-period weighted moving average. Notably, the pair seems to have formed a head and shoulders pattern. Therefore, I suspect that the GBP/USD price will retreat in the near term as bears target the 1.3740 level, which is the first support of the standard pivot points.
GBPUSD chart
