UK Inflation Numbers to Test Sterling Amid Stubbornly High CPI
- Buy Stop: 1.2271
- Take Profit: 1.2350
- Stop Loss: 1.2110
- Sell Stop: 1.2135
- Take Profit: 1.2050
- Stop Loss: 1.2235
GBP/USD rose after the Office of National Statistics in the UK stated that the country’s unemployment rate had remained steady at 3.7% while the economy had added over 74k jobs in the three months to December. Furthermore, average earnings before bonuses increased to 6.7%. The US then released January’s inflation statistics, which indicated an increase in inflation to 0.5% on a monthly basis, followed by a fall to 6.4%, which was much higher than pre-pandemic levels. However, the pair’s gains were fleeting and were reversed.
For the GBP/USD pair, there are two significant forthcoming catalysts. The first is the upcoming UK inflation figures, which are anticipated to come in at 10.3% for the headline inflation and 6.2% for the core CPI in February, remaining stubbornly high as usual. In the upcoming months, the Bank of England (BoE) has hinted that it will raise rates first, followed by a deliberate pause.
The second catalyst is the most recent statistics on the US economy, which includes industrial production, the New York Manufacturing Index, and retail sales.
Technical indicators such as a spinning top candlestick formation on the four-hour chart imply that the GBP/USD pair is now indecisive. The major resistance level at 1.2193 (the highs of February 9 and January 9) has been somewhat breached by the pair, although it is still above the 25-period exponential moving average. If the pair moves above the upper half of the spinning top at 1.2271, a bullish breakout will be verified. A move below the 1.2118 support level, however, will indicate that the bears have won.
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