The GBP/USD pair saw its third consecutive decline on Tuesday, dipping below the 1.3400 mark. Traders dealing in British pounds are pulling back as they await the Consumer Price Index (CPI) inflation report from the UK, which is set to be released on Wednesday. The US CPI data is anticipated on Friday.
For September, UK headline CPI inflation is expected to rise to 4.0% year-on-year, with core CPI likely reaching 3.7%. Inflation pressures remain elevated in the UK, restricting the Bank of England’s options as recession concerns grow.
In contrast, the U.S. market doesn’t seem to face the same intensity of challenges, though issues do persist along similar lines. The U.S. CPI figures set to come out on Friday are projected to show a slight uptick in inflation, with the annual headline CPI forecasted to move from 2.9% to 3.1%. While changes in the U.S. CPI might echo those in the UK, the lower inflation rates could allow the Federal Reserve to proceed with at least two more interest rate cuts by the year’s end.
GBP/USD price prediction
On the daily chart for GBP/USD, the British pound is trading around 1.3360. Recent movements suggest a phase of consolidation following a series of lower highs and higher lows. The pair appears to be sandwiched between the 50-day exponential moving average (EMA) near 1.3440 and the 200-day EMA around 1.3290—indicating a lack of clear direction among traders.
The Relative Strength Index (RSI) sits at about 44, which hints at a slightly bearish momentum but isn’t overly low. This scenario indicates that sellers have some upper hand, though overall confidence isn’t strong.
Price levels have repeatedly respected the 200-day EMA, highlighting its role as a significant support level. Conversely, attempts to rally toward the 50-day EMA have struggled, emphasizing its importance as a short-term resistance point.
GBP/USD is likely to trade within a range until it either climbs decisively above 1.3450 or drops below 1.3290. A close beneath the 200-day EMA could lead to testing the next key support level around 1.3140, while breaking above the 50-day EMA might refocus attention on the 1.3780 area.
