GBP/USD has been quite volatile and corrective recently after impulsive bearish pressure breaking below 1.37 with a daily close. Today, the pair is likely to trade with higher volatility as the UK Inflation report hearing is scheduled for Tuesday. This market-moving event is expected to favor further GBP gains in the coming days.
Citing the recent BOE Governor Carney's speech, inflation rate is expected to increase by 0.5% for the month and expected to continue growth in the coming months as well. Such increase in inflation is expected to be a strength for the upcoming obstacles in the UK economy. Along with the inflation report, today the UK Public Sector Net Borrowing report is due which is expected to increase to 7.2B from the previous negative figure of -0.3B and CBI Industrial Order Expectation is expected to decrease to 2 from the previous figure of 4.
On the other hand, today USD Richmond Manufacturing Index report is going to be published which is expected to increase to 9 from the previous figure of -3. This week, the FOMC is holding a policy meeting, which is expected to strengthen the USD gains in the future.
As for the current scenario, certain volatility and corrective price action is expected in this pair as macroeconomic reports and events are slated for this week, including the UK Second Revised GDP report on Friday, Governor Carney's speech, FOMC Meeting on Wednesday and after that FED Chair Jerome Powell will speak about monetary policy decisions. This week, the pair is set to be very volatile and corrective. GBP is expected to have an upper hand over USD in the nearst days.
Now let us look at the technical view. The price is currently showing some bullish pressure in the market ahead of the macroeconomic reports. Though the Bullish Divergence is currently being observed in the market, certain bearish pressure is expected to push the price a bit lower before the price starts to inject bullish impulsiveness in the pair. As the price remains above 1.33 with a daily close, the bullish bias is expected to continue with target towards 1.37 in the coming days.
