GBP/USD: Key levels to watch ahead of the UK CPI data

The GBP/USD price declined for the fourth consecutive day as forex investors reacted to the relatively mixed jobs numbers from the UK. It dropped to 1.3763, which is 3.3% below the February 24 high of 1.4240.

Better UK jobs data amid a pandemic

The UK labour market did better than expected, according to the latest figures by the Office of National Statistics (ONS). The unemployment rate declined from 5.1% in December to 5.0% in January. This was slightly better than the median estimate of 5.2%.

Still, analysts at ING expect that the unemployment rate will rise to 6.0% later this year as the government ends its furlough program.

Wages, too, continue to increase although the performance was below estimates. Without bonuses, the average earnings increased from 4.1% in December to 4.2% in January. With bonuses added, the wages rose from 4.7% to 4.8%.

Meanwhile, the claimant count increased to 86.6k in February mostly because of the impact of the ongoing lockdowns.

UK inflation data in focus

The GBP/USD declined ahead of the upcoming UK inflation numbers that will come out tomorrow. Economists polled by Reuters expect the data to show that the overall headline consumer price index (CPI) rose from -0.2% to 0.5% in February. This, in turn, will lead to an annualised gain of 0.8%.

Meanwhile, core CPI, which is a closely-watched figure that excludes the volatile food and energy products, is expected to rise by 0.5% on a month-on-month basis and by 1.4% on an annualised basis. While these numbers are still below the Bank of England (BOE) target of 2%, there is a possibility that they will keep rising later this year.

The GBP/USD will also react to the producer price index (PPI) and the Retail Price Index (RPI) figures.

GBP/USD technical forecast

The GBPUSD price formed a triple-top pattern at 1.4000 in the past few days. Today, it declined below the neckline of this pattern at 1.3780. It is along the lower line of the Bollinger Bands and slightly below the 25-day and 15-day exponential moving averages (EMA).

Therefore, the path of least resistance for the pair is bearish, with the next key target being at 1.3700. However, a rally above the resistance at 1.3875 will invalidate this trend.