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Weekly British Pound (GBP) Forecast: Inflation in Focus Again as Weak Pound Continues to Hurt UK Consumers

Weekly British Pound (GBP) Forecast: Inflation in Focus Again as Weak Pound Continues to Hurt UK Consumers

Warren Venketas, Analyst
What's on this page


  • Spotlight on UK CPI!
  • BoE may move to a 50bps hike in August.
  • Cable remains under pressure despite short-term relief rally.


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Next week’s economic calendar is rife with high impact events from both the UK and U.S. (see economic calendar below) with UK inflation being the main focus for the pound. Both core and headline inflation figures have yet to take a step back since September last year with expectations looking at another increase. This should increase hawkish pressure on the Bank of England (BoE) to increase interest rates by 50bps in August – which they have put forward as an option in during their last rate announcement.

Money markets have been pricing this in for some time now but the central bank will need to take into consideration rising unemployment (albeit marginal) and a slowing UK economy. Inflation is unlikely to abate from monetary policy as we are well aware of the supply issues stemming from the Russia/Ukraine war.


gbpusd economic calendar

Source: DailyFX Economic Calendar

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gbpusd daily chart

Chart prepared by Warren Venketas, IG

Daily GBP/USD price action shows the recovery post-FOMC and BoE but has since given back some gains on Friday. Bulls are finding resistance at the 20-day EMA level (purple) and as we head into Wednesdays CPI read I don’t see much in the way of significant price moves for cable. I expect prices to hover between the 1.2200 and 1.2400 levels respectively with my medium/long-term outlook in favor of the U.S. dollar. While there is still room for upside in the short-term, a key point of inflection would be around trendline resistance (black) and whether or not we see a candle close above (breakout) which could then prompt a mindset change to a potential trend reversal.

Key resistance levels:

  • Trendline resistance (black)
  • 1.2494
  • 1.2400
  • 20-day EMA (purple)

Key support levels:

  • 1.2080
  • 1.1934 (swing low)


IG Client Sentiment Data (IGCS) shows retail traders are currently LONG on GBP/USD, with 71% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment however, due to recent changes in long and short positioning we arrive at a short-term mixed bias.

GBP/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -4% 7% 1%
Weekly -18% 14% -5%
What does it mean for price action?
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Contact and follow Warren on Twitter: @WVenketas

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.