GBPUSD:
The pound is losing ground after softer-than-expected UK inflation data, which strengthened expectations of a Bank of England rate cut in the coming months. Easing price pressures and cooling consumer activity raise the likelihood of earlier policy loosening, reducing the appeal of short-term investments in sterling assets.
Additional pressure comes from weak growth dynamics and the economy’s sensitivity to borrowing costs: real gilt yields remain above pre-pandemic levels, limiting investment demand and slowing credit activity. The mix of slowing wage gains and an easing housing market reinforces the case for an earlier policy move than was assumed not long ago.
Externally, the dollar’s strength ahead of the FOMC meeting weighs on the pair: investors hedge against potentially firm language on US inflation into year-end. This supports demand for dollar assets and makes GBPUSD rebounds suitable for selling, aiming for a return to the 1.32 area with controlled risk.
Trading recommendation: SELL 1.3325, SL 1.3375, TP 1.3225
Origin: FreshForex
