Inflation Cools! GBP/USD Set to Fall Further

Summary:

In the United Kingdom, political uncertainty is likely to limit the pound’s upside potential until the next prime minister begins to outline his or her political agenda.

SELL GBPUSD

EXP

TRADING

1.32221

Entry Price

1.28000

1.34500

1.32295 +0.00352 +0.27%

0.0

Pips

Flat

1.28000

Exit Price

1.32221

Entry Price

1.34500

Fundamentals

A joint survey by Citibank and YouGov shows that the British public’s inflation expectations continued to decline in June. Long-term inflation expectations for five years or more—a key focus for the central bank—fell from 4.0% in May to 3.9%; meanwhile, driven by short-term price and energy cost fluctuations, inflation expectations for the coming year dropped significantly from 4.7% to 3.8%.

More than three-quarters of economists expect the federal funds rate to remain unchanged for the remainder of 2026, up from the previous month; however, the number of forecasters anticipating at least one rate hike this year has surpassed those expecting a rate cut for the first time since 2023. The Federal Reserve kept interest rates unchanged at 3.50%–3.75% this month, but new Chair Wash emphasized the priority of the inflation target during her first press conference, sending a hawkish signal that exceeded market expectations.

Technical Analysis

On the daily chart, the GBP/USD pair shows Bollinger Bands widening downward, with moving averages diverging downward, indicating that the downtrend remains intact. The RSI stands at 38, indicating that market participants are predominantly selling. On the 4-hour chart, the Bollinger Bands are beginning to narrow, moving averages are flattening, and the MACD fast and slow lines continue to trade below the 0 line, suggesting a high probability of further declines. The RSI stands at 53, indicating that market participants are mostly taking a wait-and-see approach. Strategically, look to sell on rallies.

Inflation Cools! GBP/USD Set to Fall Further_1

Inflation Cools! GBP/USD Set to Fall Further_2

Trading Recommendation

Trading Direction: Sell

Entry Price: 1.322

Target Price: 1.28

Stop-Loss Price: 1.345

Support Levels: 1.32, 1.3, 1.28

Resistance Levels: 1.37, 1.38, 1.41

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Inflation Cools! GBP/USD Set to Fall Further

Risk Disclosure