Last week economic data that was published for UK was weak, you can see the latest GBPUSD Weekly Wrap Up.
This week the CPI was, as expected 2.8%, with 0.8 percent over the inflation target of BOE, though. The Producer Price Index was published at an unexpected high level of 3.2%, with 1.5% over the forecast. This has pushed an alarmed button for the officials and they have said that from now on the inflation risk will be taken more seriously. Meaning that they might refrain from adding more monetary stimulus. Today the Retail Sales came 2.1%, way over the 0.5 percent estimates, and moved the pound higher.
News about the Bank’s asset purchase will be published only on 4th of April. Next week the economic calendar contains, between other indicators, the Current Account and Final GDB.
While looking at the down trend we discovered that the price has moved between four parallel lines. Two of them are forming a very nice descending channel. From the beginning of this month the pound has managed to keep itself around 1.5 level with the American dollar. It seems that an accumulation area was formed but not yet confirmed. The price didn’t break the inverted Head and Shoulders baseline, which is a very good supply zone.
The target of the reversal pattern is situated at 1.5574, the level is also a 50% retrace of the down trend. A four hours bar that will close over 1.5225 will be the price action confirmation that we are waiting for.