GBP/USD forecast ahead of UK inflation and FOMC minutes
- The GBP/USD price formed a double-top pattern on the 4H chart.
- The UK will publish the latest inflation and jobs data this week.
- The Federal Reserve will publish the latest FOMC minutes.
The GBP/USD price pulled back on Monday as investors prepared for a relatively busy week. The pair dropped to a low of 1.2100, which was slightly below last week’s high of 1.2277. The price is about 2.90% above the lowest level this month. The EUR/GBP is also consolidating at 0.8456.
FOMC minutes and UK inflation
The GBP to USD exchange rate will be in the spotlight this week as the Office of National Statistics (ONS) publishes key economic data.
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The ONS will publish the latest jobs numbers on Tuesday. Economists polled by Reuters expect the data to show that the country’s unemployment rate remained unchanged at 3.8% in June. They also expect the economy continued to add jobs while wage growth slowed.
These numbers will be followed by the upcoming consumer inflation numbers scheduled for Wednesday. Economists expect these numbers to reveal that inflation continued surging in July. Precisely, they believe that the headline inflation rose from 9.4% to 9.8% in July.
They believe that the core consumer inflation rose from 5.8% to 5.9%. Further, they expect that the producer price index (PPI) input and output rose to 23.6% and 17%, respectively.
The GBP/USD price has also dropped as investors wait for the upcoming minutes by the Federal Reserve. The minutes will provide more details about the deliberations that happened during the last meeting. In it, the bank decided to hike interest rates by 0.75% and hinted that it will continue hiking rates.
Recently, however, data showed that US inflation dropped from 9.1% to 8.7% in July. Still, some Fed officials like Mary Daly and Neel Kashkari said that the bank will continue hiking interest rates. The GBP/USD price will also react to the latest retail sales data.
The four-hour chart shows that the GBP to USD exchange rate formed a double-top pattern at 1.2277. In price action analysis, this pattern is usually a bearish sign. It has moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has dropped below the neutral point. The stock has moved below the 38.2% Fibonacci Retracement level.
Therefore, the pair will likely continue falling as sellers target the key support level at 1.2000. A move above the resistance level at 1.2145 will invalidate the bearish view.