GBPUSD currency pair is trading in a narrow range on Tuesday, at last week’s closing levels. Traders are focused on the upcoming publication of US inflation data. With a limited economic calendar in the UK, external factors will determine the market sentiment.
Monday’s trading was calm. Sir Dave Ramsden, Deputy Governor of the Bank of England, emphasized the need for staying alert in the face of increased economic uncertainty in the UK. However, his statement didn’t have a significant impact on market sentiment.
At the US session, the Federal Reserve Bank of New York presented an updated survey of inflation expectations. According to the document, US consumers are facing conflicting prospects: expectations of improvement in personal financial situation are accompanied with growing concerns about rising prices and tightening credit conditions. Average inflation expectations for the year ahead increased to 3% in November, which increases uncertainty in the market.
Traders await the release of US consumer price index data on Wednesday. According to consensus forecasts, the annual inflation may rise to 2.7% in November compared to 2.6% in October. This data can significantly affect the rate of the GBPUSD pair, as it will determine expectations regarding the Fed’s monetary policy.
According to the technical point of view, GBPUSD is moving to corrective growth on the H4 timeframe. In terms of wave analysis, the pair is forming the second ascending wave. The RSI (standard values) indicates the possibility of a change in the trend and the beginning of the third downward wave, which is confirmed by divergence.
The short-term outlook for the GBPUSD pair is to sell with the target at 1.2510. Part of the profit could be fixed near 1.2630. The Stop loss could be set at 1.2920.
The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
