GBP/USD – The Cable Pair Price May Keep Dropping For Now
- Take Profit: 1.2800
- Stop Loss : 1.2900
- Time Line: 1 day
- Buy Stop : 1.2890
- Take Profit: 1.2950
- Stop Loss : 1.2800
We saw a drop in the price of the cable pair following the release of UK consumer inflation and retail sales figures. The pair fell to 1.2850, reaching the key support level and is awaiting interest rate decisions from the Federal Reserve. The downtrend started after the UK CPI data revealed a drop in inflation rates making it 7.9% in June. The core inflation also went down and the overall decline exceeded the expectations of analysts. The UK economy is boosted by the surge in retail sales which is attributed to the warm weather.
Many analysts are anticipating a 0.25% rate hike to be announced in the next meeting of the Bank of England. The expected rate hike was 0.50% prior to the release of Inflation figures but as of now the Bank is expected to go easy with the rate hikes as the inflation rate is not as alarming as before. The next key data releases to look forward to for the pair is Preliminary Manufacturing and Service PMI Numbers. As per economists, the manufacturing sector may show signs of contraction for the month of July. For the Fed interest rate, analysts expect it to be 0.25% for the upcoming meeting which is something to watch out for the pair.
On the price charts, it was evident how the retail sales numbers triggered a drop to key support level, which resulted in the pair trading at 1.2850 when the peak price for the month was 1.3144. The RSI has shifted over the oversold level and a bearish crossover is being formed by the 25-period and 50-period MAs. As of now, the price is sitting at a psychological level as well as the highest swing on 16th of June. Hence, we can expect the cable pair price to keep on dropping with a bearish sentiment as of now.