The Great Britain Pound (GBP) extended downside movement against the US Dollar (USD) on Wednesday, dragging the price of GBPUSD to less than 1.3125 following the release of some key economic news from Britain. The technical bias remains bearish because of a Lower Low in the recent wave on a daily chart.
As of this writing, the pair is being traded near 1.3105. A support may be noted around 1.2796-1.2800, which is the confluence of a psychological number as well as the low of the latest major downside move as demonstrated in the given below daily chart. A break and daily closing below the 1.2800 support area could incite the renewed selling pressure, validating a move towards the 1.2500 support area in the long run.
On the upside, the pair is likely to face a hurdle near 1.3475, a major horizontal resistance area ahead of 1.3533, the high of June 29th and then 1.3844, another major horizontal resistance area. The technical bias will remain bearish as long as the 1.5017 resistance area is intact.
UK Consumer Price Index
The Consumer Price Index (CPI) – a key gauge for inflation – rose more than expected in Britain, a government report said yesterday. The CPI rose to 0.5% in July as compared to 0.3% in the same month of the year before, according to a report by the Office of National Statistics. Analysts had predicted a reading of 0.4%, according to a survey conducted by Bloomberg. Generally speaking, a higher CPI reading is considered positive for the economy and vice versa. CPI reports are closely monitored by the Monetary Policy Committee (MPC) members in decision making particularly interest rate and quantitative easing decisions.
Considering the overall technical and fundamental outlook, selling the pair on short term rallies appears to be a good strategy for intraday trading.