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Support Still Holding

GBPUSD continues to cling to support around the 1.2171 level. The level has acted as a magnet over recent months with price oscillating around that price point since mid-September.  An attempt earlier this month at breaking higher saw price running into trouble at the 1.2437 level with that area acting as key resistance now.
 

UK Recession Risks

In recent days, the focus has shifted back to potential UK recession risks. The first look at Q3 GDP saw growth at 0%, down from 0.2% over the prior quarter and barely above the -0.1% the market was looking for. With risks that the final figure comes in negative, fears of a downturn are acting as a barrier to higher prices.
 

Hawkish BOE Expectations

However, GBP has managed to avoid a fresh leg lower, perhaps driven by hawkish BOE expectations. The BOE warned last time around that further tightening would likely still be needed and cannot be ruled out. 
 

GBP Traders Await Inflation Data

The focus now turns to UK CPI due on Wednesday. The annual figure is expected to fall sharply to 4.7% from 6.7% prior. If seen, this should keep GBP anchored firmly lower near-term. However, any stickiness will no doubt drive fresh buying in the Pound as traders focus on BOE tightening expectations. Ahead of that release we also have US CPI due on Tuesday meaning there is plenty of volatility risk for GBPUSD this week. 
 

Technical Views

GBPUSD

(Click on image to enlarge)

For now, the pair continues to hold in range between 1.2171 and 1.2437, still above the broken bear channel highs. While 1.2171 holds, a further push higher still looks likely, in line with bullish momentum studies readings. Should we break below 1.2171, however, focus turns to deeper support at the 1.1843 level. 

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