(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3250.
• Add a stop-loss at 1.3500.
• Timeline: 1-2 days.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3500.
• Add a stop-loss at 1.3250.

The GBP/USD exchange rate plunged to a multi-week low as investors reacted to the latest US Consumer Price Index (CPI) data. It retreated from a high of 1.3790 on July 1 to the current 1.3390.

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The GBP/USD exchange rate has been in a strong bearish downtrend over the past few days, as investors have shifted back to the US dollar. The US Dollar Index (DXY), which measures the performance of the US dollar against other major currencies, rose to over $99.

This price action accelerated after the US published the latest CPI data. The data showed that the headline CPI rose from 2.4% in May to 2.7% in June, meeting analysts' estimates.

Core inflation, which excludes the volatile food and energy prices, rose from 2.8% to 2.9%, better than the median estimate of 3%. The monthly figure increased from 0.1% in May to 0.2% in June, falling short of the estimated 0.3%.

The next key catalyst for the GBP/USD exchange rate will be key data from the US, like the producer price index (PPI) and manufacturing and industrial production data. It will also react to statements from Fed officials like Beth Hammack, Lorie Logan, and Michael Barr.

The GBP/USD pair will react to the latest US inflation data. Economists expect the data to show that UK's inflation remained intact at 3.4%. Core inflation is expected to remain intact at 3.5%.

These numbers will provide more information about the actions the Bank of England (BoE) will take. The bank has delivered two cuts this year, and analysts see it cutting rates later this month.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily chart shows that the GBP/USD pair has plunged in the past few weeks. It has retreated from the year-to-date high of 1.3790 on July 1 to the current 1.3400. It moved below the key support at 1.3430, the upper side of the cup-and-handle pattern.

The pair has moved below the ascending trendline that connects the lowest point since June this year. It has also dropped below the 50-day Exponential Moving Average (EMA), while the Relative Strength Index (RSI) has pointed downwards.

Therefore, the pair will likely continue falling as sellers target the support at 1.3300. A move above the resistance point at 1.3430 will invalidate the bearish view.

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