Inflation data from the United Kingdom and FOMC minutes
The GBP/USD pair reacted modestly to the upbeat UK GDP figures released on Friday. According to the figures, the country’s GDP grew somewhat in the second quarter. It grew by 0.2% in Q2, aided by King Charle’s coronation activities. Analysts predict that growth will slow in the second half of the year.
On Monday, there will be no significant UK economic data. As a result, traders’ attention will be drawn to the next UK employment and inflation figures, which are scheduled for Tuesday and Wednesday, respectively. These figures will give us a better idea of what to expect from the Bank of England (BoE).
Economists anticipate that the unemployment rate remained at 4.0% in June, with the economy adding over 50k jobs in the three months to July. The United Kingdom, like other industrialized countries, is experiencing serious labor shortages.
On Wednesday, the UK will release consumer and producer inflation numbers for July. According to economists polled by Reuters, headline consumer inflation fell by 0.5% in July, resulting in a 6.8% year-on-year increase. On the other hand, they anticipate that core inflation would rise to 7.4% in July.
The upcoming US retail sales data and FOMC minutes will also be significant movers for the GBP/USD pair. Retail sales are expected to rise in July, but inflation is expected to fall somewhat. The Fed will release meeting minutes, which will provide further context for the next decision.
Technical analysis of the GBP/USD
After peaking at 1.3140 in July, the GBP/USD pair has been on a downward trend. It has continued to trade below the 25-day and 50-day moving averages, as well as the 50% Fibonacci retracement line. The pair found solid support around 1.2667, its lowest point since August 3rd.
As a result, if bears manage to cross the support at 1.2667, the outlook for the pair is bearish. If this occurs, the psychological support level at 1.2600 will be the next to be monitored.