While waiting for the Fed's interest rate decision on Wednesday, GBP/USD is moving without any clear direction near the 1.2230 level.
Prior to the Fed's release and Jerome Powell's press conference, market participants will pay attention to British inflation data. Analysts expect a decline from 10.1% to 9.8% (y/y) and an increase of 0.6% (m/m).
Core inflation is likely to remain at 5.8%.
But of course, the main event of the day will be the news from the United States. The Fed has a difficult task. On the one hand the regulator has to continue the fight against inflation, on the other hand it has to pay attention to the problems of the financial sector and not to allow the banks to go bankrupt.
Analysts mostly believe that the Fed will choose the "middle" option and raise the rate not by 50 but by 25 basis points to 5.00%. Investors want to see from Jerome Powell's speech whether the Fed will end its monetary restriction cycle or take a pause. Or maybe the central bank will continue to raise the rate to the previously indicated targets.
The Bank of England will hold a rate hike of 25 basis points tomorrow, although today's inflation report might influence the regulator's decision.
Technical Analysis GBP/USD
Bollinger Band indicator is rising moderately. MACD indicator remains in the positive range. Stochastic Oscillator from the top down is testing the 80% level and trying to get out of the overbought area.
Today is an eventful day, each of which can completely cancel the signals of technical analysis. At the same time Forex trading based on the news is risky and for traders who prefer calm position trading, the best option is to stay out of the market.
For the followers of "technique", a break-down of the resistance at 1.2283 will be a buy signal. The target is at 1.2400. Stop-loss is taken out at 1.2230.
It is advisable to open short positions after the price fixes below support at 1.2yo176. Target level is 1.2100. Stop-loss is set at 1.2225.