After experiencing an 83 day long up trend, GPBUSD started slowing down around the end of January. Following that, we have seen it trend down for most of February, and now on the 18th we had the release of CPI (Consumer Price Index) y/y, which did not end in a good result for the British pound as we saw a 100 pip drop in GBPUSD since the news release.
This drop was really significant, as it will probably be the determining factor for the trend on GBPUSD until the next release, meaning that we will more than likely have a strong bear trend for the pound.
Also, considering the fact that the dollar has been gaining against most majors recently, this will more than likely be a very strong short term down trend. Something to look out for would definitely be interest rates and Core CPI, as they will have a stronger effect on the trend in the long run, and if they align with the 18th’s direction, we might see a couple months of regaining for the dollar against the pound.
But while all of this is going on, we saw a gain for the pound against the Swiss franc, so not all is bad for the pound currently. Switzerland has weaker inflation than the UK, which is good for the country, but not as good for the currency. Lower inflation means lower interest rates and investors don’t want low interest rates for the currency they invest in, so they will go for the pound over the Swiss francs, which as a result, gives better prices for the pound.
But, mostly against other majors, the pound is currently down, especially because most countries are focusing toward improving interest rates. GDP has also slowed quite significantly, with a lot of trade wars going on we see a slow in GDP growth, which definitely has not done the pound any good. And looking at how the trade is currently be ran across the globe, it does not seem likely to be resolved any time soon.
But there is hope that Core CPI could still change things for the pound when it gets released. As long as the interest rates don’t drop too much or stay the same for too long, this will likely just be a very short term down trend for the pound, and within weeks the currency will strengthen up again.
(Just my opinion, not financial advice)