GBP/USD Price Analysis: Sep Cut on the Table as US Inflation Cools

• The GBP/USD price analysis suggests an almost absolute chance that the Fed will cut rates in September.

• Data on Tuesday revealed that the US CPI increased by 0.2% as expected.

• Trump threatened a lawsuit against Powell for poor management of renovations.

The GBP/USD price analysis suggests an almost absolute chance that the Fed will cut rates in September after soft US inflation figures. As a result, the dollar is wallowing near a two-week low, allowing the pound to climb. Meanwhile, UK employment data showed a mixed picture that might keep the BoE cautious. 

–Are you interested to learn more about ECN brokers? Check our detailed guide-

Data on Tuesday revealed that the US CPI increased by 0.2% as expected. This was a decline from the previous reading of 0.3%. Meanwhile the annual figure came in at 2.7%, lower than the estimate of 2.8%. The soft figures supported the outlook for a more dovish Fed in future. 

After the report, market participants were pricing a 98% chance of a rate cut in September and this weighed on the dollar.

“US CPI release turned out to be a dollar-negative event,” said Francesco Pesole, strategist at ING. “The September Fed cut remains firmly priced in.”

Elsewhere, Trump threatened a lawsuit against Powell for poor management of renovations at the Fed’s headquarters. Market participants took this as a continuation of his attacks on the Fed.

Meanwhile data on Tuesday revealed that Britain’s job market slowed. However, wage growth remained strong.

GBP/USD key events today

Market participants do not expect any key economic releases today. Therefore, they will keep absorbing the US consumer inflation numbers.

GBP/USD technical price analysis: Rally nears 1.3575 resistance

On the technical side, the GBP/USD price has rallied in an impulsive move that is approaching the 1.3575 key resistance level. The price trades well above the 30-SMA, showing bulls are in the lead. At the same time, the RSI is in the overbought region, indicating solid bullish momentum. 

–Are you interested to learn more about day trading brokers? Check our detailed guide-

Bulls have maintained the uptrend since they took charge near the 1.3151 key support level. The price has stayed above the 30-SMA and made higher highs and lows. Given the strong bullish bias, the price might soon challenge the 1.3575 resistance. A break above would strengthen the bullish bias.

However, if the resistance holds firm, the price will likely bounce lower to retest the 30-SMA. Moreover, it might make a deeper pullback to retest the 1.3401.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.