UK CPI preview: What to expect of GBP/USD?

GBP/USD is seen consolidating the upside around 1.2915, with the bulls taking a breather heading into the much-awaited UK inflation report, which will be published later this session at 8.30GMT.

UK CPI to stay unchanged in July

The UK consumer prices are expected to show no growth in July y/y, after having booked 0.5% reading in June. While core figures, excluding volatile food and fuel costs, are expected to tick lower to 1.3% from 1.4% seen last.

The data from the UK is likely to attract a lot of attention as it will offer some of the earliest insight into the real impact of Brexit on the economy.

Analysts at TD Securities note, “We expect a decline in inflation to 0.4% y/y vs consensus of 0.5% and the Bank of England’s recent forecast of 0.6% y/y. We see core inflation decelerating slightly to 1.3% from 1.4% in June (consensus: 1.4%).”

GBP/USD Technical Levels

Haresh Menghani, Analyst at FXStreet believes, “The ongoing recovery could get extended towards 1.2940 immediate horizontal resistance. On a sustained move above this immediate resistance, the pair seems all set to extend the recovery trend towards the descending trend-channel resistance near 1.2985-90 region (just below 1.3000 psychological mark).

Meanwhile on the downside, sustained weakness back below 1.2880 immediate support might continue to exert selling pressure and drag the pair back towards the descending trend-channel support that currently stands near 1.2835 level. A follow through selling pressure, confirming a break-down, would increase the pair’s vulnerability to extend its ongoing slide back towards post-Brexit swing lows support near 1.2800 round figure mark.”