Pound/Dollar currency pair is trading around 1.3930. The GBP/USD pair's volatility remains low in the middle of the week, despite a block of inflation data from the UK.
According to the Office for National Statistics, the consumer price index rose 0.7% year-on-year in March, although a stronger strengthening was expected. Core inflation excluding volatile food and energy prices rose 1.1% last month, in line with the forecast. The increase in fuel and clothing prices had the biggest impact on the change in the 12-month inflation rate between February and March 2021. GBP/USD currency pair remains under pressure below 1.3950, as consumer price growth in the UK is still not strong enough.
According to the consensus forecast, the pair has reached its local maximum. In the near future, the quotes are expected to decline. A failure in the planned vaccination program, a downward shift in economic growth forecasts, and an insufficient recovery in inflation will put significant pressure on the Pound. At the same time, investors seem convinced that the Fed will keep interest rates low for a longer period. This, along with the recent sharp decline in US treasury yields, should also be a drag on the USD. Thus, the dynamics of the pair in the short term will again be determined not by the strength of the currency itself, but by the weakness of its competitor.
Trading Signals for GBP/USD
In the forecast, the GBP/USD is expected to decline to 1.3900, 1.3875 and 1.3850.