Baxia Markets
March 20, 2024

GBPUSD on Edge: UK CPI Data Release Looms

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The GBPUSD currency pair remains on a knife-edge as investors await the release of the UK Consumer Price Index (CPI) data for February. Technical signals suggest bearish momentum is building, adding to the anticipation surrounding the crucial inflation figures.

The Office for National Statistics is set to unveil the UK CPI data on Wednesday, with expectations pointing to a decline in both headline and core annual inflation rates, while the monthly CPI is anticipated to surge. Analysts note that the outcome of this release could significantly impact the Bank of England's (BoE) interest rate outlook and consequently influence the trajectory of the Pound Sterling.

GBPUSD on Edge: UK CPI Data Release Looms

According to forecasts, the headline annual UK Consumer Price Index is projected to rise by 3.6% in February, marking a slowdown from the previous month's 4.0% increase. Despite this expected moderation, the figure remains well above the BoE's 2.0% target, underscoring persistent inflationary pressures in the economy.

In the midst of this uncertainty, technical indicators are painting a bearish picture for the GBPUSD pair. Market participants observed a rebound on the Exponential Moving Average (EMA) 200 during the Asian trading session, indicating some support at this level. However, the price briefly breached below the EMA 200 before swiftly recovering, highlighting the fragile nature of the current market sentiment.

Moreover, the EMA 50 is edging closer towards the EMA 200, signaling a potential strengthening of bearish momentum and a weakening of bullish sentiment. Oscillator indicators such as the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) further confirm the bearish bias. The MACD's signal line has plunged below the 0 level for the past 8 trading days, while the RSI dropped to 30% before staging a modest rebound. However, failure to surpass the 60% mark on the RSI could indicate further downside potential for the currency pair.

Against this backdrop, GBPUSD traders are eagerly awaiting the CPI news release, as it could provide the catalyst for the next major move in the pair. A higher-than-expected CPI figure is likely to reignite bullish momentum and propel the Pound Sterling higher. Conversely, a disappointing outcome could exacerbate selling pressure on GBPUSD, pushing it towards lower levels.

In conclusion, the GBPUSD currency pair finds itself at a critical juncture, with technical signals pointing to growing bearish momentum ahead of the UK CPI data release. Traders are advised to remain vigilant and closely monitor the inflation figures for potential trading opportunities in the forex market.


Key Takeaways

  1. GBPUSD Await UK CPI: GBPUSD remains in suspense ahead of the UK Consumer Price Index (CPI) release for February, a key determinant of the Pound Sterling's value.

  2. Technical Signals Bearish: Technical indicators suggest bearish momentum is strengthening, with moving averages and oscillators signaling potential downside pressure on the currency pair.

  3. Inflation Expectations: Forecasts anticipate a slowdown in UK CPI growth, though remaining above the Bank of England's 2.0% target, underscoring persistent inflationary pressures.

  4. Market Fragility: Despite a brief rebound, GBPUSD's price action shows vulnerability, with the pair hovering around key moving averages amid uncertain market sentiment.

  5. BoE Interest Rate Outlook: The outcome of the CPI release could significantly influence the Bank of England's interest rate decisions, further shaping GBPUSD's trajectory in the forex market.


Key Economic Releases to Watch Today

GBP,  CPI (YoY) 

Forecast 0.0% vs Previous -0.1%



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