Unlike the euro, the pound has returned to the levels it was at before the release of preliminary inflation data in the eurozone. This is somewhat logical due to the fact that the data mounted pressure on the euro, while there were no economic reports or news from the UK. Today, the situation is quite similar. The economic calendar is basically empty, and only European Central Bank President Christine Lagarde's speech can affect the market. Primarily, it will affect the euro.
The impact on the pound will be significantly less noticeable. The question is, where will all this lead? Most likely, Lagarde will take note of the slowdown in inflation and maybe even suggest the possibility of a rate cut. Of course, she will not mention any specific timing. But it could be clear that she is already starting to make a hint in December. The euro will fall further, pulling the pound along with it. However, the decline in the British currency will be much less pronounced and possibly short-term.
Last Friday, the GBP/USD pair managed to recover relative to the recent corrective move. As a result, the quote returned to the area of the resistance level of 1.2700.
On the four-hour chart, the RSI technical indicator is hovering in the upper area of 50/70, thus reflecting bullish sentiment among traders.
On the same chart, the Alligator's MAs are headed upwards, which corresponds to the upward cycle.
Outlook
The EUR/USD kicks off the new week with a decrease in the volume of long positions, accompanied by a rebound from the level of 1.2700. In this case, hitting the 1.2700 mark indicates a prevailing bullish sentiment. In perspective, this could extend the upward cycle in case the pair tests last week's high. The bearish scenario will come into play in case the pair trades sideways between the levels of 1.2600/1.2700.
Comprehensive indicator analysis indicates a downward cycle in the short term due to the rebound. Meanwhile, the bullish sentiment remains in force in the intraday and medium-term periods.
