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.

GBP/USD Forecast

Chart of GBP/USD - 21st January 2021

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.

Market Analyst / Trading Consultant at Asif Imtiaz
Market Analyst / Trading Consultant . Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com
Asif Imtiaz

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