The release of the US consumer price index is due today. The data is expected to clarify the Fed’s further policy regarding interest rates in 2025. According to the consensus forecast, the core CPI is expected to rise by 0.2%, with risks being tilted to the upside. A stronger index at 0.3% and higher can cause another strengthening of the US dollar, including the GBPUSD currency pair.
The CPI report is preceded by yesterday's release of the US producer price index. This data was surprisingly weak. The actual index for December was only 0.2% despite November’s figure and forecast of 0.4%.
In Europe, Great Britain is in the spotlight for the expected release of the consumer price index for December.
The monthly index is estimated to rise to 0.4% from 0.1%, while the annual index is expected to remain 2.6%.
From the technical point of view, the GBPUSD pair looks oversold on the daily timeframe. The situation of interest may involve the US inflation not showing the expected increase and the UK CPI rising above the forecast. This combination of data could sharply push GBPUSD higher with the aim of testing the resistance level at 1.2480.
Graphically, the daily timeframe shows the formation of bullish divergence, including the RSI indicator. The price on the chart is setting new lows, which are not confirmed by the indicator. This situation suggests a possible upward correction.
The overall recommendation is to buy GBPUSD provided that the US CPI is below the forecast while the UK one exceeds expectations.
Profits should be taken at the level of 1.2480. A Stop loss could be set at the level of 1.1880.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
