GBP/USD looks to extend rebound after UK inflation data

GBP/USD outlook: Sterling rises after inflation data and generates initial reversal signal

Cable accelerated higher on Wednesday morning after UK inflation data showed that price pressures continue to ease, but core inflation remains elevated and close to its record high, warning that the Bank of England would need to further raise interest rates, as inflation is still 3 ½ times above the central bank’s target.

Fresh strength generates fresh signals of possible reversal after the bear-leg from 1.3141 (2023 high, posted on July 14) was contained by rising daily Ichimoku cloud. Recent spikes (1.2620/1.2616) also form a double-bottom pattern, which needs to be verified on further gains and breach of pivotal barrier at 1.2817 (Fibo 38.2% of 1.3141/1.2616). Read more…

GBP/USD Forecast: Pound Sterling looks to extend rebound after UK inflation data

GBP/USD turned north and climbed to a fresh six-day high above 1.2760 in the European morning on Wednesday. The near-term technical outlook points to a buildup of bullish momentum. Following strong wage inflation readings on Tuesday, the data from the UK revealed on Wednesday that core consumer inflation remained stick in July. Hawkish Bank of England (BoE) bets gained traction and provided a boost to Pound Sterling midweek.

The Consumer Price Index (CPI) declined to 6.8% on a yearly basis from 7.9% in June but the Core CPI held steady at 6.9%. According to Reuters, markets are fully pricing in a 25 basis points (bps) rate hike in September and see the BoE raising the policy rate by a total of 75 bps by February 2024 after the latest jobs report and inflation data. Read more…

Pound Sterling extends upside as sticky core CPI triggers long-lasting inflation risks

The Pound Sterling (GBP) is strengthening, inspired by persistently high core inflation data. The GBP/USD pair delivers a consolidation breakout as the Core Consumer Price Index (CPI) remains stable at 6.9%, higher than the forecast of 6.8%. Robust wage growth keeps consumer spending momentum intact and core price pressure near its immediate peak of 7.1%.

The United Kingdom’s stubborn core CPI is enough to force the Bank of England (BoE) to consider a continuation of the aggressive rate-tightening spell. The UK’s central bank has already raised interest rates to 5.25%, and now further policy tightening appears more likely. Meanwhile, headline inflation contracted in July as firms passed on the benefits of cheap oil prices to end consumers. Read more…