GBPUSD set to be rocked by inflation combo

• US CPI expected to inject volatility into cable
   
• UK inflation is weaker than expected
   
• Key technical levels include 1.29400, 1.29630 and 1.27873
   
• GBPUSD above key SMAs, confirming bullish sentiment

GBPUSD saw a -0.19% decline on the back of weaker-than-expected CPI data out of the UK and may be set for more volatile price moves as market participants redirect their focus toward the impending release of CPI data from the United States slated for approximately 12:30 GMT, expected out of the US at about 12:30 GMT.

The consumer price Index which measures the changes in the prices of goods and services.
 

• 3.0% year-on-year headline CPI (July 2024 vs. July 2023)

If that 3.0% forecast proves true, that would be the same as last year’s 3.0% y/y number
 

• 0.2% month-on-month CPI (July 2024 vs. June 2024)

If that 0.2% forecast proves true, that would be notably higher than June's -0.1% m/m number
 

• 0.2% month-on-month core CPI (excluding food and energy prices, which tend to see bigger swings)

If that 0.2% forecast proves true, that would be higher than June’s 0.1% m/m core number.

A higher-than-expected US CPI may cause the cable to decline, a scenario that GBPUSD bears will embrace.

On the other hand, a lower-than-expected US CPI data may push the cable higher, an event cable bulls will savor.

From a technical perspective…

GBPUSD closed firmly above both its 50-day and 21-day simple moving averages on yesterday’s August 13th, 2024, price action, confirming a bullish sentiment, leading into CPI Day.

Near term resistance levels may include the following:
 

• 1.29400: A significant round number price level
   
• 1.29630: The price at the 161.8 golden Fibonacci ratio
   
• 1.30364: The upper bound line of a potential symmetrical triangle

In the event of a decline possible near term support levels may include:
 

• 1.28349: The 21-day simple moving average
   
• 1.27873: The 50-day simple moving average
   
• 1.27095: The 100% Fibonacci level.
   

The Fibonacci level is drawn from April 9th, 2024, high at 1.27095 to April 22, 2024, low at 1.22994.