GBP/USD Forecast: Risk is still skewed to the upside

GBP/USD Current price: 1.3644

• The United Kingdom inflation was upbeat in December, up by 0.6% YoY.
• The UK macroeconomic calendar has nothing to offer this Thursday.
• GBP/USD retreated from fresh two-year highs, still has chances of advancing further.

The GBP/USD pair reached a fresh two-year high of 1.3718 this Wednesday but quickly trimmed intraday gains, to close the day with modest gains in the 1.3640 price zone. The UK released December inflation data earlier in the day, which were slightly better than anticipated. The CPI was up by 0.6% YoY, better than the 0.5% anticipated, while the core annual reading printed at 1.4%, also above the market’s forecast. The Producer Price Index in the same month also improved.

Resurgent demand for the greenback, however, put the pair under pressure, ahead of the US opening, with the decline extending through the American session. The UK won’t publish relevant macroeconomic data this Thursday, and the focus will remain on coronavirus developments in the kingdom.

GBP/USD short-term technical outlook

The GBP/USD pair has limited bearish potential in the near-term, despite its latest retracement. The 4-hour chart shows that it holds above all of its moving averages, although the 20 and 100 SMAs converge directionless in the 1.3560 price zone, somehow indicating an absence of speculative interest. Technical indicators eased within positive levels, with the RSI now stable around 53.

Support levels: 1.3620 1.3585 1.3530  

Resistance levels: 1.3715 1.3760 1.3805

View Live Chart for the GBP/USD