GBP/USD:1.3800 as the Pivot Ahead of UK Inflation Data

Summary:

GBP/USD is finding support at 1.3800 ahead of the UK inflation data. The pair will also react to Fed Chair's testimony and US PPI data.

GBP/USD is finding support at 1.3800 as investors wait for further cues from the UK inflation data. Economists expect the UK CPI data for June to come in at 2.2% YoY compared to the prior month’s 2.1%. With the exclusion of the volatile food and energy components, the forecasted core CPI of 0.2% MoM is lower than May’s 0.8%. UK Producer prices are also set for release in today’s session. On the part of the US dollar, the higher-than-expected CPI numbers have exerted pressure on GBP/USD. The US core CPI figures for June came in at 0.9% MoM, beating the estimates of 0.4%. In today’s session, the focus will be on Fed Chair’s testimony and the US PPI data.

GBPUSD technical analysis

GBP/USD has paused on its plunge as it finds support along the resistance-turn-support level of 1.3800. In the previous session, the currency pair dropped from an intraday high of 1.3905 to a low of 1.3800. At the time of writing, it was up by 0.03% at 1.3817. On a three-hour chart, it is trading below the 25 and 50-day exponential moving averages.

In the near term, GBP/USD is likely to trade within a tight range of between 1.3800 and along the 25-day EMA at 1.3842. Depending on the outcome of the UK inflation data, the bulls may gather enough momentum to push the prices past that resistance level to the psychological level of 1.3900.

On the flip side, a move below the current support level will have the bears eyeing July’s low of 1.3730 and the psychological level of 1.3700.