GBP/USD and EUR/GBP Analysis and Charts

• UK inflation is expected to move lower again.
• Sterling volatility should increase mid-week as heavyweight data hits the screens.

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FX markets have been moved around this week by the US dollar with the greenback weakening and strengthening on dovish Fed speak and higher-than-forecast headline inflation respectively. With little in the way of any heavyweight UK data, GBP/USD has traded in a 1.2165 to 1.2335 range over the past five days with the pair currently at the lower bound.

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Next week the latest UK inflation data and Jobs report will be released. Core inflation is seen falling by 0.2% to 6% y/y while headline inflation is also seen two-tenths-of-a-percentage point lower at 6.5%. The UK jobs report is expected to show the unemployment rate steady at 4.2%, while average earnings inc bonus is expected to fall to 8.3% from 8.5%. UK retail sales round the week off on Friday. Any significant deviation from expectations in the jobs or inflation data will spark a reaction in Sterling-pairs.

Cable is fading lower again going into the weekend and eyes the 78.6% Fibonacci retracement at 1.2089 ahead of last Wednesday’s multi-month low at 1.2038. Below here there is little in the way of any strong support before the March low at 1.1803 comes into focus.

GBP/USD Daily Price Chart

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EUR/GBP remains in a multi-month range and is likely to remain contained in the weeks ahead. The recent uptrend after testing support in late August is now broken, while the 200-day sma continues to press down on the pair. A break below the 50-day sma, currently at 0.86070 would open the door to further losses.

EUR/GBP Daily Price Chart – October 13, 2023

Charts using TradingView

What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.