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UK CPI next: impact on GBP/USD

FXstreet.com (Barcelona) - Inflation figures in the UK will be in the limelight later, with market consensus expecting consumer prices to have expanded at an annual pace of 2.6% in April and 0.4% on a monthly basis. The forecasts point to the British economy to join the recent disinflation fashion prevailing in the economies of the euro area.

After posting weekly lows around 1.5150 last Friday, the sterling has initiated this week with a decent bounce, climbing to the boundaries of 1.5280 on Monday just to give some ground afterwards to the current area of 1.5235/40. Key levels to watch would be Monday’s highs at 1.5281 ahead of the 10-day moving average at 1.5306, while May 20th lows at 1.5166 and 1.5128 (61.8% of 1.4832-1.5607) on the other hand.

“Technical readings in the 4 hours chart show 20 SMA converging with the Fibonacci level reinforcing the resistance around 1.5210/20, while technical readings remain in negative territory, all of which suggest is not yet time to buy: price needs to overcome the resistance area and settle above to trigger an upward continuation rally, with scope then to extend towards 1.5260/1.5300 area”, suggested Currency Analyst ">Valeria Bednarik at FXstreet.com.

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