GBP/USD Tests Resistance Near 1.3700 Amid Rising Inflation in the UK
Last Updated on January 21, 2021
GBP/USD Outlook: 21st January 2021
United Kingdom – Consumer Price Index
On Wednesday, at GMT 7:00 a.m., the UK’s Office for National Statistics released the year-over-year Consumer Price Index (CPI). It measures the changes in the price of goods and services acquired by consumers.
The CPI basically measures the inflation level in the economy. This data is considered online forex brokers in the United Kingdom as one of the most important leading indicators of the overall economic health.
Last month, the UK’s CPI (y/y) increased by 0.3%. Analysts were expecting that for this month, it will grow at a faster pace, at 0.5% growth. The actual result came out much better than expected, at 0.6% increase.
United States – Unemployment Claims
On Thursday, at GMT 1:30 p.m., the US Department of Labor will release the unemployment claims figure, which measures the changes in the number of people who claimed for unemployment insurance over the last week.
Forex traders consider the unemployment claims data to be one of the most important fundamental indicators of the US job market. This is primarily because unemployment and consumer spending have a direct correlation and an increasing number of unemployment claims indicate lower consumer spending in the economy, which makes up the bulk of the economic activity in the United States.
Last week, the US unemployment claims figure came out at 965,000. This week, analysts are expecting it to come down to 930,000.
Since the last week of September 2020, the GBP/USD formed three uptrend lines. During this time, it has gone up by around a 1,000 pips. However, after reaching the 1.3700 level in early January 2021, it found a strong resistance. Earlier today, the GBP/USD once again tested the resistance near 1.3700. Currently, it is trading just below this level.
The US unemployment claims figure will likely come down a bit. But, it will likely remain above 900,000. By contrast, the UK’s Consumer Price Index has gone up by 0.6%, more than what analysts were expecting. We believe it would set a bullish fundamental outlook for the GBP/USD this week. Therefore, if the GBP/USD closes above the resistance near 1.3700, it would likely attract additional bullish momentum in the market.
Hence, CFD traders should look out for trading opportunities above this major resistance level around 1.3700.
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