• GBP/USD advanced above 1.3500 on Monday as markets prepared for US inflation data and UK GDP figures later this week.
• Economists expect the U.S. July consumer price index to have risen 3.4% year on year in data on Wednesday, compared to 3.5% the previous month.
• Core CPI, which excludes volatile food and energy prices, is expected to ease to 2.5% year-on-year from 2.6% in June.
•Producer price data on Thursday and retail sales figures on Friday will further inform the outlook for inflation.
• Attention in the UK is shifting to Thursday’s preliminary Q2 GDP reading amid uncertainty over the economic outlook..
• The UK economy is expected to have grown 1.1% on an annualised basis in Q2, supported partly by lower energy prices. Retail sales also surprised on the upside in June, boosted by warm weather and World Cup-related spending.
• Immediate resistance is located at 1.3543(50%fib), any close above will push the pair towards 1.3606(Higher BB)
• Strong support is seen at 1.3426(SMA 20) and break below could take the pair towards 1.3395(38.2%fib).
Recommendation: Good to sell around 1.3550, with stop loss of 1.3620 and target price of 1.3450
