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This week’s parade of U.K. consumer-related reports got me looking at Cable’s downtrend.

Will GBP/USD make new monthly lows this week?

Here’s the chart that I’m looking at:

GBP/USD: 1-Hour

GBP/USD 1-Hour Forex Chart

GBP/USD 1-Hour Forex Chart

In case you missed it, “riskier” bets like GBP recouped some of their losses last Friday after days of risk aversion and selloffs.

GBP/USD went up all the way to 1.2300 where it found resistance.

And why not? As you can see, The 1.2300 handle is near the 100 SMA, the 50% Fibonacci retracement of the last downswing, and a trend line resistance that’s been holding since the second half of April.

Trend warriors have a chance to jump in the downtrend this week as the U.K. prints its CPI and retail sales reports.

Inflation is expected to hit fresh record highs at 9.1% in April while retail sales activity could show further slowdown as consumers spend less amidst higher prices.

If this week’s reports encourage talks of the Bank of England (BOE) ending its tightening cycle sooner than what other central banks have planned, then GBP/USD could make new monthly lows in the next few days.

But if last Friday’s risk-taking extends to this week, or if this week’s data releases encourage the BOE to keep calm and carry on with its tightening schedule, then Cable could retest or even break its trend line resistance on the 1-hour time frame.

What do you think? Which way will GBP/USD go?

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