The GBP/USD pair will likely continue falling as sellers target the next key support at 1.1900
Set a sell-stop at 1.1900 and a take-profit at 1.1900.Set a stop-loss at 1.2100.Timeline: 1-2 days.
Set a buy-stop at 1.2090 and a take-profit at 1.2200.Add a stop-loss at 1.2000.
The GBP/USD price wavered in the American and Asian sessions as investors reacted to the latest economic data from the UK and the FOMC minutes. It was trading at 1.2080 on Thursday morning, which was lower than this month’s high of 1.2287.
UK Inflation and FOMC Minutes
The GBP/USD price has been in the spotlight this week as the Office of National Statistics (ONS) publishes important economic data. On Tuesday, numbers revealed that the labor market was cooling as the jobless rate increased slightly in June. Additional data published on Wednesday revealed that UK’s inflation continued surging in July as the cost of energy rose. The headline consumer inflation rose by 0.6% on a month-on-month basis in July.
This increase as bigger than the expected 0.4%. It led to a year-on-year increase of 10.1%, which was also higher than the expected 9.8%.
Excluding the volatile food and energy prices, UK’s inflation rose from 5.8% in June to 6.2% in July. Again, this increase was higher than the expected 5.9%.
Companies also experienced higher prices. The producer price index input and output rose by 22.6% and 17.1%, respectively. Therefore, analysts believe that the Bank of England (BoE) will be under pressure to hike more without pushing the economy to a recession. The ONS will publish the latest UK retail sales on Friday.
The GBP/USD price also wavered after the Federal Reserve published the latest minutes. The minutes showed that officials were still concerned about the rising inflation. But most of them were concerned about the pace of hikes.
As a result, the bank hinted that it would start hiking rates at a slower pace. Analysts are now pricing in a 0.50% hike in September followed by 0.25% in the final two meetings of the year.
The four-hour chart shows that the GBP/USD price has been in a downward trend in the past few days. This decline happened after the pair formed a double-top pattern at 1.2288. In price action analysis, this pattern is usually a bearish sign.
The pair has moved below the 25-day and 50-day moving averages and the 38.2% Fibonacci Retracement level. Therefore, the pair will likely continue falling as sellers target the next key support at 1.1900. This view will be confirmed it manages to move below 1.200.
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