GBP/USD Forex Signal Today 27/03: Loses Momentum (Chart)

(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.2765.
• Add a stop-loss at 1.3015.
• Timeline: 1-2 days.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3015.
• Add a stop-loss at 1.2765.

The GBP/USD exchange rate pulled back after the UK published relatively weak UK consumer inflation data. It dropped to a low of 1.2885 on Thursday, down by 0.97% from its highest point this year.

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The GBP/USD exchange rate retreated after the latest UK economic numbers raised odds that the Bank of England (BoE) would slash interest rates in the coming meeting. According to the Office of National Statistics (ONS), the headline Consumer Price Index (CPI) dropped from 3.8% in January to 2.8% in February, missing the analyst estimate of 3.0%.

Core inflation, which excludes the volatile food and energy prices, dropped from 3.7% in January to 3.5% in February, also lower than the median estimate of 3.6%. The closely watched Retail Price Index (RPI) moved from 3.6% to 3.4%, lower than the expected 3.5%.

These numbers mean that the UK inflation is moving in the right direction, even though it remains much higher than the Bank of England's target of 2.0%.

The GBP/USD pair also retreated after Donald Trump continued his rhetoric on tariffs ahead of his so-called Liberation Day next week. He has said that he will announce large reciprocal tariffs on foreign goods on April 2, a move that may lead to higher inflation. He announced auto tariffs on Wednesday.

In a statement, Alberto Musalem, the head of St. Louis Fed, warned that US inflation may be stuck above 2% for long if tariffs continue.

Looking ahead, the next key catalyst for the GBP/USD pair will be the upcoming UK GDP and personal consumption expenditure (PCE) data. The first two GDP numbers showed that the US expanded by 2.3% in the fourth quarter after growing by 3.1% in Q3.

EURUSD Chart by TradingViewGBP/USD technical analysis

The daily chart shows that the GBP/USD exchange rate retreated to a low of 1.2885, its lowest point since March 11. It has dropped below the 61.8% Fibonacci Retracement point at 1.2925.

The two lines of the MACD have made a bearish crossover, while the Relative Strength Index (RSI) has drifted downwards. The RSI has moved to the key point at 55. On the positive side for the GBP/USD pair, it has remained above the 25-day moving average.

Therefore, the pair will likely drop to the 50% retracement point at 1.2760, and then bounced back to the year-to-date high of 1.3015. A break above that resistance will point to more gains, potentially to 1.3100.

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