The Consumer Price Index (CPI) in the UK declined on an annual basis yesterday, recording a growth of 2.8%, which is lower than both the expectations and the previous reading (3.0%). Additionally, the core CPI on an annual basis fell to a growth rate of 3.5%, also below expectations (3.6%) and the previous reading (3.7%). This supports the Bank of England’s inclination to continue cutting interest rates in the upcoming period.
After reaching 1.3014 last week—its highest level since November 6, 2024—the GBP/USD pair has declined and is currently trading near the 1.2900 level. However, the pair remains up by approximately 3% since the beginning of the year.
Recent UK economic data indicates weakness in the British economy, as:
• The Manufacturing PMI fell to 44.6, below expectations (47.3) and the previous reading (46.9).
• The monthly GDP contracted by 0.1%, lower than both expectations (0.1%) and the previous reading (0.4%).
• Industrial production on a monthly basis shrank by 0.9%, significantly below expectations (-0.1%) and the previous reading (0.5%).
Technical Analysis
From a technical perspective, if the pivot point at 1.2901 for GBP/USD is broken, the pair may target support levels at 1.2689, 1.2823, and 1.2773. Conversely, if the pivot point is exceeded, potential resistance levels to watch are 1.2929, 1.2979, and 1.3007.
Regarding technical indicators, the Relative Strength Index (RSI) currently stands at 59, still indicating positive momentum for GBP/USD despite its recent decline. On the other hand, the MACD (Moving Average Convergence Divergence) blue line is below the orange “Signal Line,” signaling negative momentum for the pair.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
