Jump to content

GBP/USD Forecast: Bearish GBP Bets Accumulate Ahead of UK CPI

Recommended Posts


  • UK CPI expected to be 5.4% for January - same as the December figure
  • Hedge funds and other large speculators cut longs, increase shorts ahead of UK CPI
  • GBP/USD key technical levels analysed and discussed
EUR/USD Outlook - Testing 1.1300, Driven by Ongoing US Dollar Strength


Inflation continues to garner attention as policy normalization takes effect in the UK, with a 100% probability of a 25 basis point hike (0.25%) anticipated for March via rates markets. However, Wednesday’s CPI print is forecasted to be 5.4% - the same as the month before - and could provide dovish members of the BoE with a reason to calm lofty rate hiking expectations.

Essentially, a higher than expected CPI figure fits the current narrative and is unlikely to affect the Pound in any material way. Conversely, a print in line or lower than expectations could see the Pound trade lower as market participants re-evaluate the pace and duration of future rate hikes. In addition, the US dollar is likely to remain supported as long as the situation in Ukraine continues without a peaceful resolution.

GBP/USD Forecast: Bearish GBP Bets Accumulate Ahead of UK CPI

Customize and filter live economic data via our DaliyFX economic calendar


The latest sentiment data from the Commitment of Traders (CoT) report reveals continued divergence between reported GBP longs and shorts as the cumulative net-short positioning increases.

Essentially, hedge funds and large speculators could be positioning themselves for a decline in Sterling ahead of the UK inflation data on Wednesday.

Pound Sterling Positioning (Large Speculators/Hedge Funds)

GBP/USD Forecast: Bearish GBP Bets Accumulate Ahead of UK CPI

Source: Refinitive via CFTC data compiled from the CoT report



The last fortnight of trading saw GBP/USD largely trade between 1.3515 and 1.3600 (opening and closing levels) however, today’s early price action reveals a move lower could be on the cards.

Price action failed to trade and hold above the 200 day simple moving average (SMA) and recently broke below 1.3515. Bear in mind that the IG chart makes use of a Sunday candle meaning the SMA varies slightly form chart packages not showing Sundays. A further bearish signal appears in the form of a bearish crossover as the 20 SMA looks on the verge of crossing below the 50 SMA. Keep an eye on today’s close.

A close and hold below 1.3515 with a confirmed bearish crossover brings 1.3470 and 1.3410/00 into focus as the most relevant levels of support; while a close above 1.3515 could mark the resumption of the recent sideways movement whereby resistance appears at the 1.3600 psychological level.

Daily GBP/USD Chart

GBP/USD Forecast: Bearish GBP Bets Accumulate Ahead of UK CPI

Source: IG, prepared by Richard Snow




--- Written by Richard Snow for DailyFX.com. 14th Feb 2022

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 29/09/22 05:18
  • Posts

    • In light of an acceleration in demand for both domestic and commercial solar power capacity, IGTV’s Jeremy Naylor caught up with two people involved in the business of renewables. solar   Jo Parker-Swift, founder and CEO of Solivus, an unlisted solar panel company, and Juliet Davenport OBE, founder and former CEO of Good Energy Group (GOOD) an AIM-listed disruptor in energy production. Jeremy asked about the sector, the opportunities and how Solivus fits into this fast growing space.  
    • PayPal Holdings Inc.,Elliott Wave Technical Analysis PayPal Holdings Inc.,(PYPL:NASDAQ): Daily Chart,September 29 2022 PYPLStock Market Analysis:It looks like we have a three wave structure to the downside which makes us believe the count is moving as expected. Waiting for confirmation level to be broken. PYPLElliott Wave count:{c} of 2. PYPLTrading Strategy:Lookinga break of the green line and then a three wave pullback. PYPLTechnical Indicators:We are trying to go back above the 20 EMA. TradingLounge Analyst: Alessio Barretta       PayPal Holdings Inc.,PYPL: 4-hour Chart,September 29 2022 PayPal Holdings Inc.,ElliottWave Technical Analysis PYPLStock Market Analysis:The most important thing was to count 5 waves into wave {c} and we can identify them. PYPLElliott Wave count:{c} of 2. PYPL Technical Indicators:Above the 20EMa and RSI made a bounce into neutral territory. PYPLTrading Strategy:Looking a break of the green line and then a three wave pullback.
    • The rally on Wall Street yesterday provided Asian markets with a reason to bounce, as oversold stocks and excessively bearish sentiment finally gave way to some bargain hunting among investors. The Bank of England's decision to intervene in bond markets yesterday provided the foundation for at least a short-term bounce, but whether it turns into anything more sustained remains to be seen. Longer-term of course, rates continue to rise, and the economic outlook remains grim, suggesting that earnings will keep coming under pressure. Thus while another 'bear market bounce' may be in the offing, the overall outlook still suggests that risk assets will struggle. Today sees German CPI and weekly US jobless figures, along with speeches from Fed members Bullard and Mester.   
  • Create New...