Affiliate Disclosure
Affiliate Disclosure DailyForex.com adheres to strict guidelines to preserve editorial integrity to help you make decisions with confidence. Some of the reviews and content we feature on this site are supported by affiliate partnerships from which this website may receive money. This may impact how, where and which companies / services we review and write about. Our team of experts work to continually re-evaluate the reviews and information we provide on all the top Forex / CFD brokerages featured here. Our research focuses heavily on the broker’s custody of client deposits and the breadth of its client offering. Safety is evaluated by quality and length of the broker's track record, plus the scope of regulatory standing. Major factors in determining the quality of a broker’s offer include the cost of trading, the range of instruments available to trade, and general ease of use regarding execution and market information.

GBP/USD Forex Signal: Sits at Key Resistance Ahead of UK CPI Data

Bullish view

  • Buy the GBP/USD pair and set a take-profit at 1.2750.
  • Add a stop-loss at 1.2635.
  • Timeline: 1-2 days.

Bearish view

  • Set a sell-stop at 1.2685 and a take-profit at 1.2600.
  • Add a stop-loss at 1.2750.

GBP/USD Signal Today - 20/05: UK CPI Data Ahead (Chart)

The GBP/USD surged to its highest point since March ahead of the crucial UK retail sales and inflation data. It rose to the important psychological level of 1.2700, much higher than last month’s low of 1.2298.

UK inflation and retail sales data ahead

The GBP/USD pair surged hard after the US published weak economic numbers. Inflation dropped slightly in April, with the core CPI falling to 3.6%. Retail sales slowed for the third straight month while manufacturing and industrial production remained in the negative zone.

Before that, more data revealed that the country’s consumer confidence data dropped for the sixth straight month. Most importantly, numbers by the Bureau of Economic Analysis (BEA) showed that the economy expanded by just 1.6% in Q1.

The Fed’s key challenge is that inflation remains stubbornly above its 2.0% target rate. As such, while a rate cut will help to stimulate the economy, it will increase the possibility of higher inflation for longer.

Top Forex Brokers

    The focus among traders this week will be on the crucial UK economic numbers. Economists believe that the country’s inflation tumbled in April. The headline Consumer Price Index (CPI) data is expected to come in at 2.1%, down from 3.2% in the previous month

    If this is correct, it will be the slowest inflation rate in over two years. It will also be near the Bank of England (BoE) target of 2.0%. However, analysts still expect the core CPI to come in at 3.6%, much higher than the target.

    The ONS will also release the latest retail sales data on Friday. Economists expect the report to show that sales dropped by 0.6% in April after remaining flat in March.

    These numbers will likely impact the Bank of England (BoE) in its next meeting in June. The base case is that the bank will slash interest rates by 0.25%.

    GBP/USD technical analysis

    The GBP/USD exchange rate continued rising and is now at a crucial resistance level. It was trading at 1.2700, its highest swing on May 16th and April 9th. It has also flipped the resistance at 1.2635 (May 9th high) into a support.

    The pair has moved above the 25 and 50-period Exponential Moving Averages (EMA) and the first resistance of the Woodie pivot point. Also, the MACD indicator has moved above the neutral point. Therefore, the outlook is bullish, with the next reference level to watch being at 1.2750, its third resistance point.

    Ready to trade our daily Forex signal? Check out the best forex brokers in the UK worth using. 

    Crispus Nyaga
    About Crispus Nyaga
    Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
     

    Most Visited Forex Broker Reviews