GBP/USD Daily Price Forecast – GBP/USD Hits Nine Month Lows on Disappointing Inflation Data

The pair has broken through the lows of the range and now threatens the important 1.30 region
Colin First
GBPUSD Thursday
GBPUSD Thursday

Sterling continues to stick to recent lows as economic data for the UK disappoints traders, sending the GBP spiralling into nine-month lows. Slumping economic figures are piling onto already-bearish market sentiment as Brexit squabbles within the UK continue to go nowhere. The GBP/USD is trading into 1.3080 heading into Thursday’s London session after a mild rebound from Wednesday’s lows at 1.3009 which is also the lowest in nine months, when short-sellers challenged the 1.3000 major handle after inflation numbers for the UK’s economy failed to meet market expectations. Thursday’s Retail Sales figures for the UK provide one more chance for sellers to make one more push to crack the 1.30 key levels. Even this rebound of the British Pound is influenced by Dollar’s temporary weakness rather than fundamental or technical hurdle in GBP’s favor. As US Greenback made huge upward stride following hawkish comments from Fed Chair Jerome Powell, investors took to profit booking in late North American and Asian market hours before placing further bets which gave British pound some breathing space.

GBPUSD Under Pressure

The Sterling continued the week’s bearish action yesterday, declining from the day’s high of 1.3116, and extending the slide from the weekly high of 1.3292 to run into support from 1.3009. The GBP/USD’s recovery has been half-hearted, only managing to lift some 75 pips from a nine-month bottom. Inflation expectations for the UK were broadly missed on Wednesday, with the y/y June Consumer Price Index (CPI) printing at 2.4%, remaining steady with the previous reading and missing the broader market’s forecast for an uptick to 2.6%. Core y/y CPI for June also missed, dropping to 1.9% versus the previous period’s 2.1%, and broadly missing the expected increase to 2.2%. Today’s market will see Retail Sales numbers to the Sterling trading market at 08:30 GMT, and bears can be expected to remain in control, with the m/m June Retail Sales indicator forecast to clock in at just 0.4%, compared to the previous month’s 1.3%. The y/y Retail Sales for June are expected to remain flat at 3.9%, and the monthly Core Retail Sales (excluding fuels) for June is also expected to decline, with traders calling for a slide from 1.3% to 0.3%.

GBPUSD Hourly

With softness being built into the GBP thanks to a steady stream of Brexit headlines indicating the UK government continues to squabble amongst themselves, rendering successful negotiations with the EU next to impossible, and declining economic figures further hampering the Pound’s medium-term outlook, and the 1.3000 major handle is the last remaining support preventing further downside. The 1.3000 level is a major psychological support and won’t be easy to break, yet if it finally gives up, the pair could easily lose another 100 pips. Expected support and resistance for the pair are at 1.3035 / 1.3000 / 1.2970 and 1.3080 / 1.3120 / 1.3155 respectively.

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