The dollar index is declining while waiting for inflation figures in the U.S. and for the Federal Reserve System (Fed) to announce interest rates.
The dollar has been narrowing its trading range for the last two weeks amid mixed information on the global economy and the U.S. monetary policy.
The U.S. inflation data will be published today at 11:30 GMT. The annualized consumer price index is expected to fall to 4.1%, down from the previous figure of 4.9%. Confirmation of the data will increase the probability that the Fed will maintain interest rates at the same level and may strengthen the position of the U.S. dollar in the short term.
However, inflation is still above the regulator's target of 2% annually, but the U.S. labor market remains stable. This causes concerns among investors about a possible tightening of monetary policy.
According to the CME FedWatch tool, the regulator will maintain rates at the same level with an 80% probability. There is a 20% chance that the Fed will raise them by 25 basis points.
Employment data from Great Britain today strengthened the British pound's position. Thus, the number of applications for unemployment benefits in England fell by 13.6 thousand in May after an increase by 23.4 thousand in April. The unemployment rate fell to 3.8% from the previous value of 4%.
In addition, today the Chairman at the Bank of England, Andrew Bailey, will speak in Parliament. He will have to explain the possibilities and consequences of raising interest rates to 5.50%. The announcement of the interest rate by the Bank of England is expected next week.
Expectations of this week's events may decrease the GBPUSD pair quotes.
The price of the GBPUSD currency pair is in a corrective uptrend on the hour timeframe. On Monday, price pulled back from trending resistance, indicating a move to upward support.
The curve of the Relative Strength Index indicator (standard values) is in the overbought zone, signaling a possible decline of the pair.
Signal:
Short-term prospects for the GBPUSD pair are to sell.
The target is at the level of 1.2490.
Part of the profit should be fixed near the level of 1.2535.
The stop-loss is at the level of 1.2630.
"Bearish" trend has a short-term character, so the volume of trade should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
