Consolidated price action has been seen in the GBP/USD since Monday of this week as speculators and financial houses brace for today’s U.S inflation reports.
The GBP/USD is near the 1.21450 ratios as of this writing. On Friday of last week before the lower-than-expected results via the U.S Hourly Earnings statistics were reported, the GBP/USD was trading near the 1.18500 mark momentarily. Upon the outcome of the inflation report from the U.S. the GBP/USD swiftly climbed and essentially went into the weekend near the 1.20980 realms.
Monday’s high did see the GBP/USD reach close to the 1.22100 mark, but since then the currency pair has seen a large amount of rather tight results. The trading range has largely been between 1.21050 and 1.21800 with a few outliers. Traders and financial houses have not experienced any wild reversals since the start of this week. However, speculators can expect a fair dose of volatility to emerge today in the GBP/USD.
U.S Consumer Price Index Numbers set to stir the GBP/USD and Cause Volatility
On the 14th of December, the GBP/USD was trading near the 1.24470 ratios. This was before the currency pair started to incrementally selloff as the holiday season approached, and upon consideration, the GBP/USD had been overbought. However last Friday’s reaction to the weaker-than-expected earnings numbers from the U.S. pushed financial houses into action as they reacted to the selloff that had occurred the past few weeks with a rather strong and sudden buying spree.
Consumer Price Index numbers will come from the U.S. today and the results will cause an immediate reaction in the GBP/USD. For years retail Forex traders would get calls from their brokerage firms telling them to be careful regarding the U.S jobs numbers, the past year has seen a shift to warnings about inflation data. The U.S statistics today via the Core CPI outcome will cause volatility to become dangerous. Financial houses will react to the results because this will give them more clarity regarding what the U.S Federal Reserve will do with their interest rate policy. A less aggressive U.S central bank based on weaker inflation numbers could mean a stronger GBP/USD.
Support and Resistance Levels will widen for the GBP/USD in the Coming Hours
- What has been a rather tight trading range for the GBP/USD is likely to vanish in the coming hours as financial houses and speculators position for the U.S. CPI results.
- Solid risk management will be crucial today along with conservative amounts of leverage.
If the U.S. inflation data comes in weaker than expected, GBP/USD will likely see early whipsaw results as large transactions are closed which were likely wagered on before the outcome of the CPI reports. Traders need to be careful because the near term will be rather turbulent. Traders looking for upside momentum should not be overly ambitious and be willing to cash out winning positions if they occur. If the inflation results are higher than anticipated the GBP/USD could challenge support levels swiftly too.
GBP/USD Short-Term Outlook:
Current Resistance: 1.21705
Current Support: 1.21050
High Target: 1.22710
Low Target: 1.20020
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