- The up channel pattern could represent a bearish formation.
- The US reported higher inflation in January.
- A new lower low activates a sell-off towards the weekly pivot point.
The GBP/USD price rallied but failed to stay above the 1.2200 handle. The pair is now trading at 1.2180 at the time of writing.
–Are you interested to learn more about forex options trading? Check our detailed guide-
The price registered sharp movements in both directions around the US inflation data publication. We had already forecasted that the US data could shake the markets today. The fundamentals are moving the markets quickly, so anything could happen.
As expected, the US reported higher inflation in January compared to December. The Consumer Price Index m/m reported 0.5% growth, matching expectations, versus the 0.1% drop registered in December. As expected, core CPI rose by 0.4% versus the 0.3% growth in the previous reporting period.
The USD rallied as the FED should again take action in the next monetary policy meetings. Higher inflation could force the Federal Reserve to deliver a 50-bps hike again after only a 25-bps hike in the February meeting.
On the other hand, the UK data came in mixed today. Claimant Count Change came in better than expected, the Unemployment Rate came in as predicted, while Average Earnings Index reported only a 5.9% growth versus the 6.2% growth expected. Tomorrow, the UK inflation and US retail sales data should shake the markets.
GBP/USD price technical analysis: Flag pattern
From the technical point of view, the GBP/USD price is trapped within an up channel pattern. As you can see on the hourly chart, the price registered only a false breakout with great separation above the upside line and through the 1.2263, signaling exhausted buyers.
–Are you interested to learn about forex robots? Check our detailed guide-
Still, this was only the first reaction after the US data dump. After its massive drop, a rebound was natural. The up channel could represent a bearish pattern as long as the GBP/USD pair stands below 1.2263 and under the upside line.
Coming back below the R1 (1.2170) and making a new low activates a potential sell-off towards the weekly pivot point of 1.2070 and down to the channel’s support.
Looking to trade forex now? Invest at eToro!
67% 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.
Olimpiu Tuns 
Olimpiu Tuns graduated with a Master in Business Administration and is a seasoned Market Analyst / Trader / Trainer with 10 years of experience in the financial markets having expertise in Forex, Commodities, Index, Cryptocurrencies, and Stocks. He worked as a Market Analyst for three major brokerage companies, as a prop trader, and as a contributor/content creator for news portals and educational platforms.
Source link: https://www.forexcrunch.com/gbp-usd-price-rally-stalls-at-1-2263-after-upbeat-us-cpi/
