22.05.201917:36 Forex Analysis & Reviews: GBPUSD: Pound sellers ignore strong inflation, although this should not be done

The British pound continues its fall against the US dollar, and it seems that the current downward trend will not be completed soon, although the correction, not counting yesterday's upward momentum after the performance of Theresa May, was not for a long time.

The pound was not helped by today's inflation data, which rose substantially in April of this year, exceeding the Bank of England's target level of 2%. This suggests that the regulator should think about raising interest rates, but it is unlikely that this will be done in the face of uncertainty associated primarily with Brexit.

According to a report by the National Bureau of Statistics of the United Kingdom, consumer prices in the UK rose by 2.1% in April compared with the same period last year, after rising 1.9% in March. It is worth noting that inflation exceeded its target level for the first time since December 2018. The report indicates that growth is directly related to the increase in gasoline prices, as well as air tickets.

Let me remind you that yesterday, British Prime Minister Theresa May introduced even more uncertainty in the situation associated with Brexit. May presented a new plan, designed to provide Parliament with support for its divorce proposal package with the European Union, and also stated that she was not opposed to holding a second referendum on Brexit, but on condition that her plan would be adopted by Parliament.

As for the technical picture of the GBPUSD pair, the pound continues to push down against the US dollar. New monthly lows around 1.2620 have been reached. A breakthrough of this range will keep the bearish trend and will open a direct path to the support of 1.2500 and 1.2430. As for the upward correction, it will be possible to talk about it seriously only after the return and consolidation of the trading instrument above the resistance of 1.2680.

The speech of the President of the Federal Reserve Bank of St. Louis, James Bullard, went unnoticed by the market. The representative of the Fed said that the Committee would be forced to lower the key interest rate if inflation does not show signs of a return to the desired levels. Bullard believes that if the new data on inflation disappoint again, the Fed may hint at a likely change in the monetary policy rate.

As for the technical picture of the EURUSD pair, the further downward movement will depend on the support level of 1.1140, a breakthrough of which will only increase the pressure on risky assets and lead to an update of the minimum of 1.1110. The growth of the euro will be limited to the upper limit of the side channel in the area of 1.1190.