Sits an Important Support Ahead of Fla

The GBP/USD price drifted downwards after the UK published the latest consumer inflation and retail sales numbers.

• Sell the GBP/USD pair and set a take-profit at 1.2800.
• Add a stop-loss at 1.2900.
• Timeline: 1 day.

• Set a buy-stop at 1.2890 and a take-profit at 1.2950.
• Add a stop-loss at 1.2800.

The GBP/USD exchange rate dropped to an important support level after a series of important economic numbers from the UK. It was trading at 1.2850 ahead of the upcoming Fed interest rates decision.

The GBP/USD price drifted downwards after the UK published the latest consumer inflation and retail sales numbers. Data published on Wednesday revealed that the country’s consumer inflation continued falling in June.

Precisely, the headline consumer price index (CPI) dropped to 7.9% in June, the lowest level in 15 months. The decline was bigger than what analysts were expecting. Core inflation also continued falling.

Another report published on Friday showed that the warm weather helped lift the country’s retail sales in June. Sales rose by 0.7% MoM, higher than the expected 0.2%. These numbers mean that the British economy is holding quite well.

Therefore, analysts believe that the Bank of England (BoE) will decide to hike rates by 0.25% in its meeting next week. Before the inflation figures, the expectation was for the bank to hike by a whole 0.50%.

The next important data to watch on Monday will be the preliminary manufacturing and services PMI numbers. Economists expect the data to show that UK and US’s manufacturing sectors continued to contract in July. The two are expected to come in at 45.9 and 46.4, respectively. The services sector is doing well in the two countries.

Meanwhile, the biggest GBP/USD news will be the upcoming interest rate decision by the Federal Reserve scheduled for Wednesday. Economists expect the Fed to hike interest rates by 0.25% in July. They also see the bank to leave rates intact for the remaining paart of the year.

The GBP/USD exchange rate dropped to an important support level after the latest UK retail sales numbers. It was trading at 1.2850, much lower than this month’s high of 1.3144. This price is both a psychological level and the highest swing on June 16th.

The 25-period and 50-period moving averages have made a bearish crossover while the Relative Strength Index (RSI) has moved above the oversold level. Therefore, the pair will likely continue falling as sellers target the next psychological level at 1.2800.

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