The U.K. will soon be printing its inflation data.
Will the release speed up GBP/USD’s bullish momentum?
Check out the channel that I spotted on the 1-hour time frame:
GBP/USD: 1-hour
Tomorrow at 7:00 am GMT the U.K. will be printing its February consumer price index (CPI) data.
Recall that annual consumer prices rose by 5.5% in January. A closer look revealed that it was increases in housing and utilities (gas and energy) prices that pushed the index to its fastest increase since March 1992.
But that was January. This time around, markets are pricing in a possible 6.6% jump in consumer prices for February. Whoa!
For reference, BOE is expecting inflation to “peak” at 7.25% in April though post-Russian invasion estimates have allowed for up to 8% inflation in Q2 2022.
A stronger-than-expected CPI report could convince Bank of England (BOE) members to raise their interest rates again.
This could support GBP/USD, which is trading near an ascending channel support just as the 100 SMA crossed above the 200 SMA on the 1-hour time frame.
Oh, and check out the bullish divergence on the chart!
Bullish momentum could take GBP/USD to the 1.3200 major psychological handle though we might also see range-y action if there are no other risk-friendly catalysts in the markets.
If February’s CPI comes in as or below expected, or if traders continue to buy USD after Powell’s hawkish comments, then GBP/USD could trade below the channel and 200 SMA support on the chart.
What do you think? Which way will GBP/USD go this week?
