GBP/USD Forex Signal Today 17/07: Bearish Outlook (Chart)

(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3300.
• Add a stop-loss at 1.3525.
• Timeline: 1-3 days.

Bullis view

• Buy the GBP/USD pair and set a take-profit at 1.3525.
• Add a stop-loss at 1.3300.

The GBP/USD exchange rate crash stalled as market participants reacted to important macro numbers from the United States and the UK. It was trading at 1.3400, much lower than the year-to-date high of 1.3785.

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The GBP/USD pair wavered after the Office of National Statistics (ONS) published the June consumer inflation data. The report showed that the headline consumer price index (CPI) rose from 3.4% in May to 3.6% in June, the highest level in over a year.

Core inflation, which excludes the volatile food and energy prices, also jumped to 3.7% in June from 3.5% in May. Broadly, the ONS data blamed the elevated inflation to utility bills, food, and rail transport. Strong wage growth has also contributed to steady inflation.

These numbers mean that the Bank of England may not be comfortable to cut interest rates when it meets in August if inflation remains significantly higher than its target of 2.0%.

The GBP/USD exchange rate steadied after the US published weak producer price index (PPI) data. These figures showed that the headline PPI figure dropped from 0.3% in May to 0% in June, leading to an annual increase of 2.3%. The core PPI plunged from 3.2% to 2.6%.

The GBP/USD pair reacted to media reports that suggested that Donald Trump had agreed to fire Jerome Powell, the Fed Chair. Bloomberg and other media said that the president had decided and even written a letter to fire him, a claim that he later denied.

Trump can only fire the Federal Reserve Chair for cause, which is interpreted as gross misconduct. This explains why the US dollar was largely unchanged before his denial of the reports.

The GBP/USD pair will react to the upcoming UK jobs numbers, and key US data on retail sales and manufacturing.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily chart shows that the GBP/USD exchange rate has been in a freefall in the past few days. It plunged from last month's high of 1.3783 to 1.3400 as investors booked profits and the US dollar index (DXY) rebounded.

The pair has moved below the lower side of the ascending channel and the key support at 1.3428, the upper side of the cup-and-handle pattern. It also slipped below the 50-day weighted moving average (WMA), while the Relative Strength Index (RSI) has slipped below 50.

Therefore, the GBP/USD pair will likely continue falling as sellers target the key support level at 1.3138, the lowest swing on May 12.

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