GBP/USD entered the 5th consolidation session touching 50-EMA at 1.2960 support and closing above. On the daily chart, we can notice that 10-EMA has crossed below 20-EMA at 1.3035, and the cable has failed to surge above 1.3030 for the past five sessions. ( Yellow is 20-EMA - Black is 10-EMA - Blue is 50-EMA - Orange is 100-EMA)
Currently the pair is trading at 1.2958 and in case GBP/USD closed below 50-EMA, then next destination will be 100-EMA at 1.2860+ which could take different sessions to be achieved.
Fundamentally, the pair has been on a selloff wave ever since market was disappointed to MPC voting 6-2 with dovish statement by Carney, head of BOE and failure inflation UK data that could presume that BOE is heading for a rate hike. Today, GBP/USD awaits multi inflation data on half of both counter currencies, but the main focus is UK's inflation report with CPI and Core CPI in focus.
Any reading between 2.8% and above the better could be a subject for BOE next statement stating that inflation is intolerant and such scenario will be taken hawkish by the market and we could see Sterling rallying with fury.
On the other hand, a declining CPI below 2.7% (Preferable below 2.6% as previous) will be considered positive for BOE, but negative for the currency as the statement will be that inflation is on a gradual decline and BOE has no reason to take a near term decision for increasing rates at current 0.25%. Now this could a tackle for GBP/USD and potential for further declines.
In case a neutral CPI at 2.7% as expectation, still more than previous by 0.1% will be considered neutral, and the Pound will have to look for further signs (trading Technically with strong fundamental) such as Average Earnings Index tomorrow or Retail Sales the day after. These three reports will set the tone for BOE next meeting
Be aware that U.S Dollar awaits Retail Sales this afternoon along with FOMC meeting tomorrow night with expectation for a neutral stance confined with previous appearances for Yellen and Co.
Technical Overview:
GBP/USD Closing price 1.2964
Target: 1.2865+
Resistance: 13010, 13034, 1.3080+
Support: 12960-, 12924, 1.2900*
Trend: Down
Swing Target: 65.90
Range Reversal: 131.60
Comment The market signals a short term topping turnover with potential for a selling wave to 1.2860*. Trade is poised for follow through selling this week. Any corrections should only last 2-3 days and likely stay caught below 1.3080- to maintain bear forces. A close over 1.3140* is needed to rekindle bull trend forces.