Earlier in London, GBP/USD traded as high as 1.6446 before reversing towards the 1.6400 handle after U.K. inflation came in softer than expected. Month over month inflation climbed 0.4% and the annual rate hit the 2.0% level. The news was welcomed by the Bank of England as the bank will not have to worry about tightening yet as inflation cooled and because the economy is not quite yet at the 7.0% jobless rate.
With some weaker economic prints recently hitting U.K., price action on the 30-minute chart for GBP/USD may continue to consolidate and eventually decline towards the 50-day Simple Moving Average which is currently at 1.6295. If price rallies towards the 1.6470 level, a bearish Gartley pattern may form. If valid, an immediate reversal may target the 1.6380 area. A breakout above 1.6600 will allow the pair to exhibit further bullishness towards the next major resistance objective of 1.7000.
The trade: Sell GBP/USD 1.6470, with a stop loss at 1.6515 and a take profit at 1.6380. The Risk/Reward Ratio is 1:2.
Edward J. Moya
WorldWideMarkets Online Trading