Tomorrow (Thursday 23.03) the UK CPI inflation report will be published, which is forecast to be 6% for main figures and 5% for core figures. However, while a small upward surprise (0.1-0.2 percentage points above the forecast) is unlikely to trigger a significant market reaction, I suspect a larger move would be seen if we saw a reading in line with expectations or lower.

  • UK inflation forecast – 6%
  • iH&S on H4 announces upward correction

Such a reading could disappoint buyers which would cause the exchange rate to fall slightly. However, as Chancellor Sunak is expected to declare fiscal support, the reaction to the CPI data is likely to be short-lived.

GBPUSD H4 – inverted Head and shoulders heralds a correction of declines

From the technical side, a trend reversal formation – inverse H&S – has appeared on the H4 chart. The price has already overcome the neckline and is heading north. The possible range of possible increases is the zone of 1.3420. The support and resistance level S/R at 1.3270 may stand in the way.

The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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