With CPI falling to 7.9%, will the market wait and see how much further the pound might drop?

With CPI falling to 7.9%, will the market wait and see how much further the pound might drop?

20.07.2023

In yesterday’s U.S. currency trading, the U.S. dollar rose against the pound. The GBP/USD pair fell from 1.3040 to 1.2867. It broke well below the 200-period simple moving average (SMA) on the hourly chart and halted its decline upon touching the 20-period moving average (MA) on the daily chart. Given that the GBP/USD pair has risen significantly since the start of this month and this decline comes immediately after it hit a new high for the year, we will need to assess the market direction to determine whether this corrective movement will continue for some time.

Following yesterday’s CPI release, the pound fell by approximately 1.8 yen against the yen after the year-on-year rate dropped to 7.9% from 8.7% the previous month. The GBP/JPY pair fell from 181.645 to 179.826, dropping sharply immediately after the CPI announcement.From a technical perspective, since GBP/JPY is trading below the 20-day moving average, we will wait and see if the downward trend continues for the time being.

Today, during Asian trading hours at 15:00, we have Germany’s Producer Price Index, Switzerland’s trade balance, and Japan’s machine tool orders; during European trading hours at 16:00, Turkey’s Consumer Confidence Index; at 20:00, the announcement of Turkey’s TCMB policy rate and statement; and during U.S. trading hours at 21:30, U.S. initial jobless claims and the Philadelphia Fed Business Outlook Index;at 11:00 PM, U.S. Existing Home Sales and the U.S. Leading Economic Index, and at 11:30 PM, U.S. Weekly Natural Gas Inventories. We will be closely monitoring the downside potential for the pound, which has been declining amid falling CPI figures.

Past Market Reports

1. 21.04.2026New

   With the euro-Australian dollar pair hitting new lows this month, attention is turning to how much further it might fall

2. 20.04.2026New

   Will the market wait and see how much further the U.S. dollar can rise against the yen?

3. 17.04.2026New

   Will the weakening Swiss franc recover? Attention is turning to price movements during European trading hours.

4. 16.04.2026New

   Market participants are likely keeping a close eye on the upside potential of the euro, which has risen against the U.S. dollar

5. 15.04.2026New

   Should we keep an eye on remarks by key figures in the U.S. and try to gauge the direction of currency strength?

6. 14.04.2026

   Market participants are likely watching for signs of a rebound in the Canadian dollar, which fell against the U.S. dollar following the release of employment figures

7. 13.04.2026

   Will the weakening Swiss franc continue to strengthen against the yen, or should we wait and see?

8. 10.04.2026

   Will the U.S. dollar, which has fallen against the yen, continue its downward slide, or should we wait and see how the market moves?

9. 09.04.2026

   Should we keep an eye on the upside for European currencies that have risen against the U.S. dollar?

10. 08.04.2026

    Market participants may be wary of further downside potential for the U.S. dollar, which has weakened amid concerns over the situation in Iran