British Pound Forecast – GBPUSD Struggles Continue as US CPI Release Nears

[MongiIG]

GBP/USD PRICE, CHART, AND ANALYSIS

• The latest pullback is finding little traction.
• US headline CPI rumored with an ‘8%’ handle.

Cable is finding life tough at the moment with the pair stuck in a pronounced multi-month downwards trend. This week’s fresh nadir continued a series of lower lows, while the weakness of any rebound over the past few months has kept the sequence of lower highs intact. Cable needs a period of consolidation otherwise fresh lows, and an attempt at 1.3000 looks increasingly likely.

British Pound Forecast (GBPUSD) Sterling Helpless in The Face of US Dollar Dominance

Yesterday’s US dollar sell-off may be reversed later today when we get the latest US inflation report with market talk that the headline figure may be in excess of 8%. White House press secretary Jen Psaki yesterday warned of higher headline inflation with last month’s print of 7.5% expected to be broken with ease. US inflation currently stands at a 40-year high.

 

The daily GBPUSD chart shows a cluster of prior lows pierced earlier this week before a bout of US dollar weakness yesterday allowed cable to regain 1.3100. Today’s partial fade of that move does not instil much confidence in GBPUSD, especially with the US inflation release on tap. Cable has erased its extremely oversold reading (CCI) but needs a period of consolidation if it is to move higher. Monthly UK GDP data is released tomorrow and a strong reading may well help to underpin cable at current levels ahead of next week’s Bank of England MPC decision.

For all market-moving economic data and events, refer to the DailyFX calendar

GBP/USD DAILY PRICE CHART – MARCH 10, 2022

Retail trader data show 72.64% of traders are net-long with the ratio of traders long to short at 2.66 to 1. The number of traders net-long is 1.42% lower than yesterday and 26.04% higher from last week, while the number of traders net-short is 1.29% higher than yesterday and 29.25% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.

What is your view on GBP/USD – bullish or bearish?

 

Mar 10, 2022 | DailyFX
Nick Cawley, Strategist