GBPUSD is consolidating tightly in a symmetrical triangle pattern visible on a short-term time frame, just below an area of interest indicated on the 4-hour time frame. Price could go either way, depending on the outcome of the UK CPI release in the upcoming London trading session.
Price appears to have found resistance at the 50% Fibonacci retracement level or the 1.5200-1.5250 levels, which coincide with a broken support level. Stochastic is on the move down, confirming that the selloff is likely to resume, possibly taking the pair to its previous lows near the 1.5000 major psychological mark.
The 100 SMA just crossed below the long-term 200 SMA, adding another signal that the path of least resistance is to the downside. RSI is also heading south, which means that sellers are in control of price action.
The October CPI release from the UK could serve as a strong catalyst for a breakout, with an upside surprise likely setting off a rally to the next resistance at 1.5300 and beyond. A downside surprise, on the other hand, could yield more losses for the pair.
Analysts are expecting to see another 0.1% decline in price levels, reminding market watchers that the BOE is no longer so upbeat about tightening monetary policy in early 2016. The core CPI is expected to hold steady at 1.0%.
Data from the US came in weaker than expected, as the Empire State manufacturing index showed a small climb to -10.7 instead of the projected surge to -5.3, but the dollar managed to stay afloat against its peers thanks to risk aversion. While traders still seem to be divided on a December liftoff, the US currency is able to hold on to its safe-haven appeal in the midst of market uncertainty.