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GBP/USD Analysis and Charts

  • UK inflation unchanged in January. Price pressures are expected to ease in the coming months.
  • GBP/USD struggling to recover after being hit lower yesterday by a strong US dollar.

Most Read: UK Jobs and Earnings Data Give the Pound a Boost – GBP/USD, GBP/JPY

UK inflation remained steady in January, according to the latest data from the Office for National Statistics (ONS), but came in marginally below market expectations. According to the ONS,

‘ The largest upward contribution to the monthly change in both CPIH and CPI annual rates came from housing and household services(principally higher gas and electricity Charges),while the largest downward contribution came from furniture and household goods, and food and non-alcoholic beverages.


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UK inflation is seen falling towards the central bank’s 2% target in the coming months. According to a recent Bank of England publication, UK inflation, ‘could fall to 2% for a short while in the spring before rising a bit after that’, before adding, ‘We can’t say any of this for certain because we can’t rule out another global shock that keeps inflation high.’

UK interest rate cut expectations were trimmed back by a handful of basis points after the inflation report with just under 70 basis points of rate cuts now seen this year. The first 25bp cut is now fully priced in at the August meeting.

UK Interest Rate Probabilities


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Cable remains under pressure after Tuesday’s US CPI-inspired selloff. GBP/USD is trading just above a prior level of support at 1.2547, and just below the 200-day simple moving average, and a break lower would bring the 50% Fibonacci retracement level of the March-July 2023 rally at 1.2471 into focus.

GBP/USD Daily Price Chart


Chart using TradingView

Retail trader GBP/USD data show 52.22% of traders are net-long with the ratio of traders long to short at 1.09 to 1.The number of traders net-long is 0.17% lower than yesterday and 11.06% lower than last week, while the number of traders net-short is 9.11% lower than yesterday and 2.73% lower than last week.

What Does Changing Retail Sentiment Mean for GBP/USD Price Action?

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 9% -14% -4%
Weekly -10% -5% -8%

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.


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