Cable Tests Key Support Amid UK Consumer Expectations News

The Great Britain Pound (GBP) inched higher against the US Dollar (USD) on Monday, increasing the price of GBPUSD to more than 1.3250, following the release of some key economic news. The technical bias remains bullish because of a higher high in the recent upside rally.

Technical Analysis

As of this writing, the pair is being traded near 1.3268. A support may be seen around 1.3250, the confluence of a major horizontal support as well as the psychological number as demonstrated in the given below four-hour chart. A break and four-hour candle closing below the 1.3250 support area could incite the renewed selling interest, validating a move towards the 1.3200 level in a short term.

On the upside, the price of cable is expected to face a hurdle near 1.3335, the intraday high of Friday ahead of 1.3443, the swing high of the latest major upside rally. The technical bias will remain bullish as long as the 1.3059 support area is intact.

UK Consumer Expectations

In the latest Bank of England/TNS inflation Attitudes survey, the expected annual inflation rate for the next 12 months was 2.2% for August from 2.0% in the previous quarter. The real test for expectations will come when the reported inflation starts to rise. There was a decline in 5-year expectations to 3.0% from 3.4%, while the current inflation rate was estimated at 1.8% from 2.2% in May. The headline CPI rate was 0.5% when the survey was taken with core inflation at 1.2% and RPI inflation at 1.9%.

Trade Idea

Considering the overall technical and fundamental outlook, buying the pair around the current levels appears to be a good strategy in short to medium term.

usmanahmed7290@gmail.com'

Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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