A weaker-than-expected inflation report will raise the probability of the Fed starting cutting rates in the first half of 2023.  Bullish view

 Bearish view

The GBP/USD price has come under pressure in the past two weeks as the US dollar index started its comeback. It dropped to a low of 1.2502 on Friday, its lowest level since November 23rd after the blemish-free jobs report. Fed decision, UK GDP, and US CPI dataThe most recent catalyst for the GBP/USD pair was the latest US jobs report. These numbers revealed that the unemployment rate dropped to 3.7% in November from 3.9% in October.The economy added over 190k jobs while wage growth remained higher than the country’s inflation. These numbers mean that the labor market is still firing on all cylinders despite the elevated interest rates.The next important data will come out on Tuesday when the BLS will release the latest inflation data. The inflation report is a crucial figure because it is part of the Fed’s dual-mandate role.Economists believe that inflation continued falling, helped by goods, which have fallen in the past six months straight. Gasoline, which is an important part of inflation, has dropped to its lowest point in two years.A weaker-than-expected inflation report will raise the probability of the Fed starting cutting rates in the first half of 2023.This week’s inflation report will be important because it will come on the same day that the Fed will start its two-day meeting. Economists believe that the Fed will decide to leave rates unchanged between 5.25% and 5.50%.There will be some crucial economic data from the UK as well. The Office of National Statistics (ONS) will release the latest jobs numbers on Tuesday followed by GDP on Wednesday. The BoE will deliver its final decision of the year on Thursday.There will also be heightened political events in the UK, as Prime Minister Rishi Sunak is under pressure from Tories. Some members have already submited no-confidence petitions following the recent Rwanda ruling. GBP/USD technical analysisThe GBP/USD pair continued its downtrend last week as the US dollar index continued rising. It slipped to the psychological level of 1.2500, its lowest point since November 23rd. It has also moved to the lower side of the Bollinger Bands and slightly below the 25-period moving average.The pair has slipped slightly below the 23.6% Fibonacci Retracement level. The pair has also formed a long-legged doji candlestick pattern, which is a sign of a reversal. Therefore, the pair could have a small bounce as buyers target the psychological level at 1.2600. More By This Author:BTC/USD Forex Signal: Finding Support At $41,706 EUR/USD Forex Signal: Pressured Ahead Of US CPI, FOMC, ECB DecisionsTrading Support And Resistance – AUD/USD, USD/CAD – Sunday, December 10