The Bank of England’s semi-annual Financial Stability Report was released.
On Wednesday, the UK will release its June inflation figures.
The GBP/USD currency pair is under increasing selling pressure and is on the verge of testing the monthly low.
The GBP/USD pair finished Tuesday in the red around 1.3820, with the pair bottoming around 1.3799, as the dollar benefited from surprisingly higher US inflation. The Bank of England’s semi-annual Financial Stability Report revealed that policymakers expect rates to remain at record lows until at least December 2021. “The economic outlook has improved,” the letter states, “but dangers to the recovery remain, particularly those associated to the spread of COVID.”
The UK will release its June inflation numbers on Wednesday. The Consumer Price Index is expected to rise to 2.2 percent YoY, up from 2.1 percent before, while the core reading for the same period is expected to remain unchanged at 2 percent. The Consumer Price Index is predicted to rise to 3.4 percent, while the Producer Price Index is expected to rise to 4.8 percent.
GBP/USD Technical Outlook in the Short Term
In the short term, the GBP/USD pair has more bearish potential. The 4-hour chart reveals that it spent the US session below all of its moving averages, with the 20 SMA continuing to rise although losing bullish vigor. The Momentum indicator is virtually vertically crossing its midpoint, while the RSI has gone lower at roughly 46, albeit with modest bearish strength. The pair has room to fall into the 1.3740 area, where it bottomed out in July, with a break below that level prompting more selling.
1.3790, 1.3740, 1.3790, 1.3740, 1.3790, 1.3790, 1. 1.3685
Levels of resistance: 1.3940, 1.3990, and 1.4035
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