• Risk appetite increased after China announced more stimulus measures.

• All eyes are now on US inflation figures.

• The pound remained fragile due to the recent bond market rout.

The GBP/USD price analysis shows some relief for the pound as market participants await crucial US inflation data. Nevertheless, the long-term outlook remains clouded as traders worry about UK finances amid turmoil in the bond market.

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The dollar eased slightly at the start of a new week. Risk appetite increased after China announced more measures to support its weak economy and the yuan. However, dollar bulls remain strong after the recent upbeat jobs report. Market participants expect the Fed to lower borrowing costs by 30-bps this year. This is a drop from the 50-bps expected at the start of the year. 

All eyes are now on US inflation figures, which will continue shaping the outlook for rate cuts. Economists expect consumer inflation to increase by 0.3%, similar to the previous reading. At the same time, they expect the annual figure to hold at 2.6%. A bigger-than-expected figure will lower the likelihood of a Fed rate cut this year. On the other hand, a downbeat report might bring back bets for two rate cuts this year. However, before the CPI report, traders will focus on wholesale inflation.

Elsewhere, the pound remained fragile due to the recent bond market rout. Market participants worry that the yield rally will force the government to adjust fiscal policy, hurting the economy.

GBP/USD key events today

GBP/USD technical price analysis: Bears aim for a new low in the downtrend

On the technical side, the GBP/USD price is dropping after retesting the 1.2250 key level. Bears have maintained a solid decline since the price broke below the 1.2400 support level. However, the downtrend paused at the 1.2102 level. Nevertheless, the bearish bias remains strong since the price still trades below the 30-SMA with the RSI in bearish territory. 

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Furthermore, if bears are ready to resume the downtrend, the price will soon break below the 1.2102 level to make a lower low. However, if the level holds firm, GBP/USD will make a double bottom, which could lead to a bullish reversal. The trend will only change when the price breaks above the SMA and the RSI above 50.

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