Sterling was trading flattish on Tuesday morning and the so-called cable was seen hovering around the 1.39 mark during the London session, with volatility expected to be higher throughout the day.
Later in the session, the UK annual budget will be released. This document outlines the government’s budget for the year, including expected spending and income levels, borrowing levels, financial objectives, and planned investments. This could cause some major volatility on the pound.
The US calendar will offer CPI indices for the month of February. Inflation is expected to accelerate a notch to 2.2% on the yearly basis, while the core gauge is forecast to remain unchanged at 1.8% year-on-year. Rising inflation, along with rate hikes expectations, had failed to support the US dollar so far.
Sterling is approaching the key resistance of the bearish trendline, which is located around 1.3930. As this trendline has already been tested many times, chances are it will be broken soon. This would switch the trend to bullish, targeting the next resistance of 1.40.
On the other hand, should bears be stronger today, the first support is seen at 1.3870, where previous lows are located. If not held, the bearish momentum could drag the GBPUSD pair back to the 1.38 level. In all cases we strongly recommend to have rigorous money and risk management.
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