The GBP/USD pair increased as much as 1.3282 today where it has found resistance. Now, it's traded at the 1.3213 level above 1.3194 static support. In the short term, it moves sideways within a narrow range.
The British Pound plunged after higher inflation reported by the United Kingdom. The CPI reported a 5.1% growth versus 4.8% expected, while the Core CPI registered a 4.0% growth compared to 3.7% estimates. Higher inflation is not necessarily good for a currency. Also, new restrictions that could be imposed by the authorities due to Omicron spread could weaken GBP.
The currency pair dropped even if the US retail sales data came in worse than expected. The Retail Sales reported only a 0.3% growth compared to 0.8% expected, while the Core Retail Sales rose by 0.3% versus 0.9% expected.
The FOMC could be decisive later. This high-impact event could bring sharp movement in both directions, that's why you have to be careful.
GBP/USD Exit Its Range Soon?
GBP/USD registered only a false breakout with great separation above the 1.3275 level. Now, it's almost to reach the 1.3194 static support. You can see that we have a strong demand zone below the 1.32 psychological level, the GBP/USD pair was rejected by this area.
As long as it stays under the descending pitchfork's upper median line (UML), the bias remains bearish, it could extend its downside movement. Staying above 1.3194 and making a valid breakout above the 1.3275 and above the upper median line (UML) could announce a bullish reversal.
GBP/USD Prediction!
After escaping from the Falling Wedge pattern, GBP/USD was somehow expected to grow. The upside movement was stopped by 1.3275. So, only a valid breakout above this level and above the upper median line (UML) could announce a larger upwards movement, an upside reversal. This scenario could bring great long opportunities.
On the other hand, dropping and stabilizing below 1.3194 could open the door for deeper drops.
