GBP/USD under pressure
FX BAZOOKA analyst Kira Iukhtenko
Currency markets remain thin on Tuesday as investors hold breath ahead of the tomorrow’s Fed policy announcement. British pound remains range-bound for a second consecutive day, trading in the $1.6280/6350 area.
Great Britain released a bunch of inflation figures today. CPI surprised to the downside, slipping from 2.2% to 2.1%. This was the lowest year-on-year CPI growth since 2009. Cable slipped dipped below the $1.6300 mark on the news. Softer inflation is negative for the pound as it gives the Bank of England more room to keep the rates low.
The pair has clearly slowed the recent bullish trend. Cable stays in a bearish channel after hitting a 2-year high of $1.6465 on Dec. 10.There are some technical bearish signals. However, we still see considerable support for the pair at $1.6240/30 (38.2% Fibo, channel support). The pair needs to fix below here to open the way for a deeper pullback to $.6210/00 and lower. On the other hand, we need a fix above $1.6320 to erase the short-term bearish pressure. In a medium term we concede a rise into the $1.6600 area.
Chart. H4 GBP/USD