GBP/USD Trades Under Pressure – 3 Things to Consider Today

The GBP/USD is trading strongly bearish to trade above 1.3000, the lowest levels since the first week of September 2018. Basically, there are three major reasons behind a strong sell-off. Take a look…

1) U.K. Inflation Disappoints

On Wednesday, the inflation expectations for the U.K. were broadly missed, as the CPI printed 2.4% while the market was expecting a 2.6% inflation rate.

The weaker inflation may prompt the Bank of England to delay the rate hike. Earlier, the sentiments of the August rate hike was strong, but the rate hike seems to diminish after the release of the U.K’s weaker inflation.

2) Article 50 Extension

With all the Brexit tensions, Theresa May doesn’t seem to come to conclusion regarding Brexit deals. Time is running out for reaching a Brexit agreement and the U.K. is still settling with itself. Let me remind you, the Article 50 is executed on March 29, 2019. But considering the situation, the EU may offer a short extension but things are still uncertain. With every passing movement, the Sterling is coming under heavy selling pressure.

3) Retail Sales

Recalling FX Leaders July 19 – Economic Outlook, the retail sales are due to be released at 8:30 (GMT). As per the economists’ forecast, the U.K. retail sales are expected to drop from 1.3% to 1%.

Today, the movement in the cable is heavily dependent on the retail sales, so watch closely.

Key Technical Levels

Support Resistance
1.3028 1.3108
1.3002 1.3134
1.2962 1.3174
Key Trading Level: 1.3068

GBP/USD – Trade Plan

I will be keeping a close eye on $1.3070 as below this, the market can go after $1.3010. Whereas, the violation of $1.3070 can lead the GBP/USD towards $1.3120. Good luck!