GBP Technical Analysis

Inflation data next week is expected to beat estimates again and UK finance minister Sunak contemplates billions more in spending to ease the cost-of-living squeeze

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The Bank of England (BoE) is expected to raise UK interest rates further in the second quarter of 2022 as the UK central bank tries to stem soaring prices pressures. The BoE has already lifted the Bank Rate to 0.75% from 0.1% in late 2021 and money markets are currently pricing in 125 basis points of additional rate hikes this year. The latest Office for National Statistics (ONS) inflation release showed headline inflation hitting 6.2% in February, a fresh 30-year high, while core inflation rose to 5.2% from 4.4% in January. And even higher levels of inflation are expected in Q2 this year. The latest BoE monetary policy release shows that the UK central bank expect headline inflation to top 8% in the coming months, citing sky high energy and food prices as the main drivers of the move.

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The Bank of England (BoE) is expected to raise UK interest rates further in the second quarter of 2022 as the UK central bank tries to stem soaring prices pressures. The BoE has already lifted the Bank Rate to 0.75% from 0.1% in late 2021 and money markets are currently pricing in 125 basis points of additional rate hikes this year. The latest Office for National Statistics (ONS) inflation release showed headline inflation hitting 6.2% in February, a fresh 30-year high, while core inflation rose to 5.2% from 4.4% in January. And even higher levels of inflation are expected in Q2 this year. The latest BoE monetary policy release shows that the UK central bank expect headline inflation to top 8% in the coming months, citing sky high energy and food prices as the main drivers of the move.

Daily and intra-day price is located far below 200 SMA and 100 SMA in the bearish area of the chart.
The price is trying to break 1.2999 support to below for the primary bearish trend to be continuing.

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UK retail sales and US inflation are major event risks next week.

The daily price is located below Ichimoku cloud in the bearish area of the chart: the price is on ranging within 1.2666 resistance level for the bear market rally to be started with 1.2957 target to re-enter and 1.2457 support level for the bearish trend to be continuing with with 1.2165 re-enter target for possible daily breakdown.

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The pound looks to begin next week on the backfoot after stronger than expected NFP results played into dollar strength.
The daily price is below Ichimoku cloud for the bearish ranging within support/resistance levels waiting for the direction of the rally to be started or the strong bearish trend to be continuing.

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The Federal Reserve interest rate decision may undermine the recent rebound in GBP/USD if the central bank steps up its effort to combat inflation. The daily price broke symmetric triangle pattern to above for the bear market rally to be started with 1.20 resistance level to be crossed for the rally to be continuing.

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GBP Suffers on the BoE’s Bleak Outlook. The daily price is trying to break the bullish triangle pattern with resistance level at 1,2292 to above for the possible daily bullish rebersal to be started.

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The British Pound is in for a rough ride next week with the latest employment, wages, retail sales, and inflation data all set for release. The high impacted news events for the next week are the following:
- United Kingdom Claimant Count Change, and
- United Kingdom Retail Sales.

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The British Pound pushed higher against the US Dollar this past week as softening US inflation data boosted less hawkish Federal Reserve policy bets. GBP/USD turns to UK CPI next.

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