The United States saw a slowdown in the inflation rate to 6.5% from 7.1%. The reading came better than the expected 6.7%. Indeed, consumer prices are falling steadily, paving the way for a greater reduction in the pace of rate hikes. It seems that the Fed will raise interest rates by just 25 basis points at the coming meeting. Notably, the pound showed modest growth against the greenback after the publication. Earlier, it had surged on Chair Powell's statement about a slowing in the pace of rate increases. All in all, fresh inflation data confirmed those assumptions that contributed to the weakening of the US dollar.

United States Inflation Rate:

The fact that the pound is overbought is limiting the pair's upside potential. This means that the market may enter a correction once there is a reason for that. In fact, a correction may occur already today when the UK delivers its industrial production statistics. The reading is estimated to accelerate to -2.8% versus -2.4%, which could become another proof of a recession in the country. Therefore, the pound is unlikely to strengthen.

United Kingdom Industrial Production:

The GBP/USD pair updated the swing high. It briefly went above the 1.2200 mark but then reversed, which illustrates that the pair is overbought.

The RSI bounced off the overbought level on the 4-hour chart after updating the swing high. The indicator is now moving down to line 50, signaling a pullback.

The Alligator's MAs are headed up on the 4-hour and daily charts, indicating a bull market.

Outlook

The quote is likely to fall to 1.2150. It will become clear what traders are going to do next once the level is reached. In other words, the uptrend may continue but with a corrective move within.

The uptrend will go on if the price updates the high and consolidates above 1.2250.

A downtrend could emerge once the quote falls below 1.2150 and then settles below 1.2100.

Complex indicator analysis shows the possibility of a pullback in the short term as well as an uptrend in the medium term and intraday.