The GBP/USD pair was little changed on Tuesday as investors waited for the latest UK GDP and US consumer price index (CPI) data. The pair is trading at 1.3560, which is about 1% above the lowest level last week.
US inflation and UK GDP data ahead
Most investors are focused on the upcoming US inflation numbers that will come out on Wednesday. Economists polled by Reuters expect that the data will show that the headline CPI rose from 5.4% in September to 5.8% in October. If they are accurate, the number will be the highest it has been in more than 14 years.
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Core CPI, which excludes the volatile food and energy prices, is expected to bounce back from 4.0% to 4.3%.
Still, some analysts believe that the country’s inflation is not getting out of hand. These analysts look at the month-on-month numbers. For one, the headline and core CPI numbers remain below 0.5% on a MoM basis.
Meanwhile, the GBP/USD pair reacted to the latest US producer price index (PPI) data. The numbers showed that producers continued to experience higher cost of doing business. The headline PPI remained unchanged at 8.6% while core PPI remained intact at 6.8%.
Inflation was fueled by the rising gasoline prices. Still, these numbers relatively lower than what analysts were expecting.
Still, with the Fed tightening, the US inflation numbers will provide more tea leaves about what the bank will do in the coming months. Besides, last Friday’s jobs numbers showed that the country’s unemployment rate was falling.
The next key driver for the GBP/USD will be the UK GDP data that will come out on Thursday. The numbers are set to show that the country’s economy slowed down slightly in the third quarter.
GBP/USD forecast
The GBP/USD has retreated slightly in the past hours. The pair has managed to move below the 23.6% Fibonacci retracement level and the short and longer-term moving averages. It also dropped below the descending green trendline while the MACD has formed a bearish reversal pattern.
Therefore, the pair will likely keep falling as investors anticipate a relatively higher US inflation data. If this happens, the next key support level to watch will be 1.3450.
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