Pound at multi week support – Will it break or rebound?

Pound Sterling dropped against the dollar and INR today. Currency saw pressure after lower than forecast August inflation data from the UK. Further, later today, the Federal Reserve will announce its interest rate decision and release the revised Summary of Economic Projections, which also weighed on the sentiment.
The pound weakened 0.26% after touching its lowest in almost four months following data showing UK inflation slowed more than expected in August.
UK annual consumer price inflation (CPI) unexpectedly fell to 6.7% in August from 6.8% in July. This reading came in below the market expectation of 7.1%.

Other details of the report revealed that the Core CPI inflation declined to 6.2% from 6.9% in the same period, while the Retail Price Index rose 9.1%, compared to analysts’ estimate of 9.3%

Further, the Bank of England will meet for the rate decision and the market expects to hike the rate by 25 basis points.  This will be a 15th consecutive rate increase and push the interest rate to 5.5% but expect that this would be the last in the hiking cycle and anticipate a dovish shift in BOE’s expectations.

Technical Outlook

The GBPUSD pair traded at 1.2368 today, down 0.19%. Since 17 July 2023, the pair has been trading under pressure and gave up nearly 3.50%. From the peak of 1.31258 to the recent low of 1.23322.00.

On the above chart, prices reacted to their crucial support 1.23020 levels which coincided with 50% Fibonacci Retracement levels. Also, the pair is trading near to 50 SMA which will act as an important hurdle for it.

Hence, there would be probability for short term recovery in the GBPUSD pair. It is expected that, pair may recover 1.5%-2% from the current levels.

On the upside, immediate resistance is seen at 1.23956 and a break above the pair could recover towards 1.24380-1.25080 very soon.

Alternatively, on the downside, crucial support is seen at 1.23070. A break below will bring a new crunch towards 1.21580-1.20500.

 Further, looking at the GBPINR pair, 29 September futures traded at 102.8975 near to its multi support of 102.4995. It  expects to find support above it and could recover towards 103.4350-104.1025 levels very soon. Traders may go long with strict stop loss below 102.4995.

Alternatively, a break below 102.4995 will attract pressure and the pair may drop towards 102.00-101.4360 in near future.