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The U.K. printing its inflation numbers got me looking at Cable today.

Think the pound can extend its uptrend against the dollar?

Before I show y’all my setup, lemme list down the top headlines in the previous trading sessions:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • U.K.’s inflation reports at 7:00 am GMT
  • U.K.’s PPI at 7:00 am GMT
  • U.S. retail sales at 1:30 pm GMT
  • Canada’s inflation at 1:30 pm GMT

What to Watch: GBP/USD

GBP/USD 1-hour Forex Chart
GBP/USD 1-hour Forex Chart

In case you missed it, GBP/USD has been in an uptrend since the start of the month.

The pound is now trading just under 1.3900 after hitting highs near 1.3950 earlier this week.

Take note that the selling stopped around a 50% Fib retracement that happens to line up with the 100 SMA on the 1-hour time frame.

If today’s inflation numbers cool down a bit as analysts are expecting, then Bank of England (BOE) members will have room to implement easier monetary policies and maybe extend the pound’s downswing against the Greenback.

Meanwhile, much higher-than-expected consumer price increases would justify the BOE passing the stimulus ball to Finance Minister Sunak, who is already dealing with a ballooning budget deficit.

And that’s just a news release! If the broader, dollar-buying theme extends to the London and U.S. sessions, then GBP/USD could drop back to the 1.3850 trend line support before seeing some buying interest.

But if traders decide that they like taking risks again, then Cable could extend its February uptrend and head for its previous highs near 1.3950.