The GBP/USD pair is headed for a bullish bounce, with the value dancing around 1.27. One reason why there are sentiments about the pair being bullish is the upcoming inflation data by the UK department. The rate was seen at 3.9% in November. A better control would set the tone for the pair to perform better than in the current condition.
An increase in inflation would force the Bank of England to take measures that could potentially hurt its relationship with the USD. On the other hand, controlled data for the same would help them re-establish the strong stage for the days to come.
Key Technical Trends
The last 30 days have seen GBP/USD live rent-free between 1.25 and 1.27. Movements have been more or less within the defined window. As a matter of fact, the lowest was 1.25, as observed on November 20 and November 22 this year. One time when it surpassed the window was on December 14, 2023, to touch the mark of 1.28.
The support level has been set to 1.2600.
GBP/USD have once dropped in support for Andrews’ Pitchfork tool; however, they have also gained the 50-period moving average. The next point to look out for is 1.2731, with the support level being the next best point for the pair. The GBP/USD Forex signal detects an upward trajectory. Often deemed the most liquid pair, GBP/USD continues to be influenced by the Bank of England and the US Federal Reserve.
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The US Federal Reserve has yet to take a concrete call on rate cuts, while the BoE is pondering how to come back from the bump injected by transport and other contributors.
A revision across all segments, including food and non-alcoholic beverages and recreation & culture, could assist the BoE in formulating a policy that benefits the economy and the pair.
UK Inflation Data
The Bank of England is not backing down from demonstrating its hawkish tone. Rates are still at 5.25%, with an expectation that they could stagnate for an extended period of time. The target is 2%, and it took almost 14 consecutive hikes to impose control from the point of 11.1% as of October 2022.
A statement from Jeremy Hunt, the Finance Minister of the UK, has said that the country could be moving to a point where it starts to remove inflationary pressure from the economy. He has also expressed confidence in bringing the economy back on track with business tax cuts announced in the autumn statement.
Families in the UK continue to suffer from high prices, and most of it is credited to how things are playing out across the world.
For instance, a rate hike by the Federal Reserve put pressure on the UK to keep its rates under control. A similar sentiment was checked on the INR/USD pair, wherein India has said that its measures are to ensure that regional prices align with the mindset of common citizens. It only remains to be seen if the UK will do the same to protect its export and import segments.
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The conflict between Russia and Ukraine, and now Israel as well, has placed each nation at a disadvantage. Greater emphasis is placed on the Federal Reserve’s ability to control interest rates. Another factor that is keeping the UK under check is squeezing wages from rising unemployment. The Economics Director at ICAEW, Suren Thiru, has reiterated these sentiments, stating that a decline in inflation would be adequate to reassure households that better times are on the horizon.
Conclusion
UK inflation data is about to be published, with hopes that a larger drop will be on the books. The number for November was 3.9%, a slide down from 4.6%. A larger control will facilitate seamless strength for the trading pair with the US dollar, coupled with the Fed’s decision not to hike rates any further. Better than that would be a cut in the rate.
