Oct 19, 2022
VOT Research Desk
In advance of the important UK inflation data, GBP/USD declines from a five-week-old declining resistance level at 1.1350, preferably about 1.1330.
By doing this, the Cable pair captures the market’s hesitancy in the face of a dearth of significant data or events as well as its apprehension ahead of the critical CPI statistic. Even though the BOE has already said that its QT will begin on November 1, the inflation data from today will be crucial as UK PM Liz Truss continues to pressure the “Old Lady,” as the British central bank is colloquially known, towards more rapid rate increases.
It should be mentioned that the UK CPI’s significance for GBP/USD traders is also questioned by the political tensions surrounding the country and the market’s uncertainty amid a light calendar abroad.
GBP/USD is expected to breach the immediate trend line resistance and surge towards the monthly high at 1.1500 should the inflation numbers manage to maintain their strength on the MoM in addition to reporting the multi-year high YoY numbers.
Alternatively, given the market’s confidence and the political turmoil in the UK, retreat moves may have another opportunity to reverse.
Technically, in addition to the previously indicated resistance line around 1.1250, the 50-DMA level near 1.1470 expands the upside filters. A three-week rising trend line and the 21-DMA’s convergence, however, identify 1.1140 as the area of immediate major resistance.
