The GBP/USD pair is currently trading at $1.2625, showing a slight increase from the previous day; according to the analysis, the pair will be bullish. Today’s signals suggest a 0.75% risk on trades, with two long and short-term trade ideas to consider.
The long-term trade idea recommends an extensive entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2533 or $1.2493. Meanwhile, the short-term trade idea suggests a short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2698, $1.2726, or $1.2772.
Technical analysis
On May 8th, the technical analysis for the GBP/USD pair looked extremely bullish. The British pound had risen against the dollar for many consecutive weeks and showed no sign of stopping. However, the technical picture has become more bearish in the short term. The price action suggests that the price is topping out from recent highs above $1.2650. Printing a new lower stairstep resistance level at $1.2645 reinforced this bearishness. On the other hand, the price looks like it is not quite ready to make a significant fall.
US CPI data release
Technical analysis may not be as important when the US CPI data is released at 1:30 p.m., London time. The price will likely become extremely volatile upon release. A much better-than-expected number could see the price rise dramatically, while a much higher number could cause a significant price drop. Traders should be prepared for the potential volatility and have a solid trading strategy in place.
GBP’s strength against the dollar
The pound has been one of the strongest currencies against the dollar lately, and this trend will likely continue. However, if the US CPI data release shows a significant increase in inflation, this could put pressure on the pound, leading to a short-term reversal in the trend.
Possible outcome
The GBP/USD pair is currently showing a slight increase, and today’s signals suggest a 0.75% risk on trades. The technical picture remains bullish over the long term but has become more bearish over the short term. The US CPI data release is likely to cause significant volatility, and traders should have a solid trading strategy in place.
Overall, the pound has been strong against the dollar, but a surprise increase in inflation could put pressure on the pound and lead to a short-term reversal in the trend.
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