GBP/USD Forecast: Increased bearish potential despite upbeat UK data

Valeria Bednarik FXStreet

GBP/USD Current price: 1.4110

The UK April Consumer Price Index rose 1.5% YoY, surpassing the 1.4% expected.
The risk-on mood was exacerbated by the FOMC Meeting Minutes.
GBP/USD flirts with the 1.4100 threshold after meeting sellers around 1.4200.

The GBP/USD pair fell on a daily basis, settling in the 1.4110 price zone. The pound enjoyed some temporal demand following the release of UK inflation figures. The official report showed that the April Consumer Price Index rose 1.5% YoY, surpassing the 1.4% expected and following a 0.7% advance in the previous month. The core reading came in at 1.3%, as expected. The Producer Price Index in the same period printed at 3.9%, also surpassing expectations.

The ruling risk-off mood took the pair down from an intraday high at 1.4200 to as low as 1.4098, from where it recovered just modestly. The latest was triggered by the latest US Federal Reserve Minutes, which opened the door to tightening discussions. The UK won’t publish relevant macroeconomic data on Thursday, although BOE’s Cunliffe is scheduled to speak and may comment on the future of monetary policy.

GBP/USD short-term technical outlook

The GBP/USD pair is at risk of extending its decline in the near-term, although it will continue to depend on whether investors decide to buy or sell the greenback. The 4-hour chart shows that the pair has fallen below its 20 SMA, while technical indicators accelerated their declines with the RSI currently at 47, anticipating a bearish continuation, mainly on a break below the mentioned daily low.

Support levels: 1.4105 1.4065 1.4020

Resistance levels: 1.4240 1.4290 1.4335

View Live Chart for the GBP/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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