GBP/USD Forex Signal - 21/11: UK Sales Bearish (Chart)
Date
11/21/2024 4:24:08 AM
(MENAFN- Daily Forex) Bearish View
Sell the GBP/USD pair and set a take-profit at 1.2550. Add a stop-loss at 1.2750. Timeline: 1-2 days.
Bullish View
Buy the GBP/USD pair and set a take-profit at 1.2750. Add a stop-loss at 1.2550.
The GBP/USD
exchange rate remained under pressure after the stronger UK inflation numbers published on Wednesday. It retreated to 1.2650, down by almost 6% from its highest level this year.
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Data by the Office of National Statistics (ONS) showed that UK's inflation remained steady in October. The headline Consumer Price Index (CPI) rose from 0.0% in September to 0.6% in October. This increase translated to an annual increase from 1.7% to 2.3%, higher than the median estimate of 2.2%. It was also higher than the median estimate of 2.2%.
Core inflation, which excludes the volatile food and energy products, rose from 3.2% to 3.3%, also higher than than the median estimate of 3.1%. The Retail Price Index (RPI) also rose from 2.7% to 3.4%, higher than the expected 3.3%.
These numbers mean that the country's inflation is significantly higher than what economists and the Bank of England (BOE) are expecting. As such, there is a likelihood that the bank will continue cutting interest rates gradually. For example, it means that the bank may not cut rates in its December meeting.
The next key economic numbers to watch will be the upcoming UK retail sales numbers on Friday. Economists expect the data to show that the headline sales dropped from 0.3% to minus 0.3% in October. On a year-on-year basis, sales are expected to have fallen from 3.9% to 3.4%.
S&P Global will also publish the flash manufacturing and services PMI numbers from the UK and the US/USD Technical Analysis
The GBP/USD pair erased some of the gains made this week after the strong UK inflation data. It fell from a high of 1.2715 to 1.2645 and moved below the 50% Fibonacci Retracement level at 1.2735.
EURUSD Chart by TradingView
The pair has dropped below the Ichimoku cloud indicator and the 50-day and 200-day Exponential Moving Averages (EMA). It has also retreated below the lower side of the Andrew's pitchfork tool.
The MACD and the Relative Strength Index (RSI) have all pointed downwards. Therefore, the pair will likely continue falling as sellers target the next point at 1.2550. This bearish view will become invalid if the pair rises above the resistance level at 1.2715.
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