U.K. Inflation Cools Ahead of Key Rate Decisions

The GBPUSD currency pair has embarked on a week of nuanced trading dynamics. Despite trading flat, the pair encountered a notable surge in volatility, succumbing momentarily to the USD’s vigour, leading to a brief dip to a two-week low. Yet, it swiftly rebounded, reclaiming lost ground and minimizing its week-to-date loss to 53 basis points. 

Today’s focal point of attention revolves around the United Kingdom’s inflation report, unveiling a noteworthy decline to 3.4% for February, slightly undershooting expectations and marking a 60 basis point reduction from the previous month’s figure. This trend underscores the nation’s commendable strides in curbing inflationary pressures. Core inflation echoed this trajectory, edging down to 4.5%, falling below a two-year low. 

However, amidst this economic backdrop, anticipation mounts for imminent interest rate decisions by both the Bank of England and the Federal Reserve. While no immediate adjustments are foreseen, speculation looms over the potential for rate cuts, a move capable of significantly swaying market sentiment and influencing the trajectory of the GBPUSD pair. As markets await these crucial announcements, the stage is set for a captivating interplay of economic dynamics and policy decisions, shaping the future course of this key currency pair.  


In recent weeks, the GBPUSD currency pair has undergone a notable shift in sentiment. Initially, the pair enjoyed an uptrend, buoyed by bullish sentiment above the 100-day moving average and sparked at the 1.25997 level, which served as a robust support zone. However, overbought conditions signalled a potential reversal as the pair approached the 1.28935 level, dampening the upward momentum. 

Subsequently, a downturn ensued, accompanied by the emergence of a descending channel pattern, affirming the tilt towards downside sentiment. The breach of key technical levels, including the 100-day moving average and the 61.80% Fibonacci Retracement Golden Ratio, underscored the strengthening bearish bias, coinciding with oversold RSI conditions. 

Nevertheless, a pivotal moment arrived as the pair tested the lower boundary of the channel, witnessing a resurgence in bullish momentum that propelled it back above the Golden Ratio level. Moving forward, attention remains fixated on the 1.28935 resistance level as a potential barrier to further upside gains. Conversely, a sustained breach below the Golden Ratio level could precipitate a retest of the 1.25997 support level. 


As the GBPUSD navigates through economic shifts and technical patterns, attention gravitates towards pivotal levels: 1.28935 resistance and 1.25997 support. Amidst cooling inflation and impending rate decisions, market sentiment remains poised, underscoring the delicate balance between fundamental factors and technical dynamics shaping the currency pair’s trajectory. 

Sources: Office for National Statistics, Reuters, Trading Economics, TradingView 

Piece Written By Nkosilathi Dube, Trive Financial Market Analyst 

Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.

Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.

CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.