GBP/USD Analysis

• Cable puts in impressive run ahead of UK GDP data tomorrow
• Risk events: US FOMC minutes, UK GDP and US inflation
• The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

Cable Puts in Impressive Run Ahead of UK GDP Data

Cable has continued its impressive lift after bottoming out a little above the psychological 1.2000 level. Buoyed by the dollar selloff, sterling is on track for a sixth straight day of gains ahead of tomorrow’s UK GDP data.

UK GDP is expected to reveal an increase of 0.3% on average over the last 3 months and a 0.5% year-on-year. The economic outlook for the UK is rather pessimistic, something backed up by the IMF’s Global Economic Outlook which saw the forecast for UK GDP drop 0.6% from the prior July estimate.

GBP/USD broke above 1.2200 with relative ease on the way to the imminent resistance 1.2345 – a level that halted prior declines in April and June this year. Early signs of a possible pullback emerged after the MACD came out of oversold territory on the 5th of October. While a lot of the move is driven by the weaker dollar, the pound has been seen strengthening against a number of G7 currencies lately. An upward surprise in tomorrow’s GDP print could add further to sterling’s momentum and keep an eye on US CPI which is forecast to

GBP/USD Daily Chart

Source: TradingView, prepared by Richard Snow

With major central banks looking to end the rate hiking cycle, FX pairs enter a new period where interest rate expectations will no longer spur local currencies appreciation. Find out what Q4 has in store for the pound by reading our guide below:

The weekly chart reveals that the bullish pullback is still in its infancy and has a fair wat to go to retrace earlier declines. The level of 1.2345 is the next level of resistance that would need to be overcome to suggest there is further momentum to the directional move.

Weekly GBP/USD Chart

Source: TradingView, prepared by Richard Snow

Major Risk Events Ahead

Apart from the FOMC minutes later this evening (19:00 GMT) there are a number of Fed speakers scheduled to have their say but Thursday is where things really pick up with UK GDP data and US CPI. US inflation data was scheduled to be the main event before the conflict began in the Middle East.

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— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX