Getting Ready to Sell GBP/USD as the UK Inflation Takes Yet Another Dive

GBP/USD has been in a steep downtrend for more than a month now. The softening economy and inflation are weighing on the GBP

The UK CPI inflation chart doesn't look good at all

GBP/USD has been in a steep downtrend for more than a month now. Part of the reason for this strong bearish move has been the softening British economy and part of it has been due to softening inflation numbers. Three months ago inflation was at around 3% in the UK and the Bank of England (BOE) was about to hike the interest rates because of it.

But, inflation started taking a bearish turn in March slipping lower to 2.7%. In April we saw another slide to 2.5% while now the main year/year CPI (consumer price index) number comes at 2.4% against the expected 2.5%.

The monthly CPI number was expected at 0.5% but the actual number came at 0.4%, so that was disappointing too. The yearly core inflation also slipped lower, from 2.3% last month to 2.1% this time.

A swan dive like this is a really bearish sign

GBP/USD took another dive, losing 50 pips after the inflation report was released. This pair is about 150 pips lower from the highs yesterday, so it has been one rollercoaster of a ride. Although it has been like this in all financial markets in the last two days, it is very difficult to trade.

Although, I’m waiting for a pullback higher to sell. I’m not waiting for anything big, just a retrace higher on the 15-minute chart, probably to the 20 SMA (green).  

ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

Related Articles

Comments

0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

HFM

Doo Prime

XM

Best Forex Brokers