The GBP/USD price remained under pressure as investors reflected on the strong American inflation data and the upcoming UK GDP numbers. It is trading at 1.3550, which is about 70 basis points below the highest level this week.
UK GDP data preview
The GBP/USD struggled after the Bureau of Labor Statistics (BLS) delivered the latest consumer inflation numbers.
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The data revealed that the country’s inflation rose to a 40-year high of 7.5% while core inflation jumped to 6.0%. The two numbers were significantly higher than what analysts were expecting.
The BLS attributed the performance of these numbers to strong demand and tighter supplies because of the overall supply shortage.
The situation will likely worsen in the next few months. For one, the Ukrainian crisis will keep pushing the prices of oil and gas higher. At the same time, the ongoing protests in Canada have made the supply chain crisis worse.
Therefore, there are concerns that the Fed will accelerate its pace of tightening. Some analysts expect that the bank could even move ahead of its scheduled meeting in March.
The next main catalyst for the GBP/USD pair will be the upcoming UK GDP data that will come out on Friday. Analysts expect the data to show that the economy did well in the fourth quarter. Precisely, they expect that the economy grew by 1.1% as the country reopened.
The other key data that will come out simultaneously with the GDP numbers are the manufacturing, industrial, and construction output.
Therefore, there is a convergence between the policies of the Fed and the Bank of England. The two banks are expected to maintain a hawkish tone this year.
GBP/USD forecast
The GBP to USD pair is trading at 1.3550, which is slightly lower than this month’s high of 1.3640. On the four-hour chart, this price is along the 25-day and 50-day moving averages. It has also moved below the first support of the Andrews pitchfork tool.
Also, the pair has moved between the 38.2% and 23.6% Fibonacci retracement level while the Relative Strength Index (RSI) has moved slightly below 50.
Therefore, there is a likelihood that the GBP/USD pair will remain in this range ahead and after the UK GDP data.
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Source: https://invezz.com/news/2022/02/11/gbp-usd-prediction-ahead-of-the-uk-gdp-data/