GBP/USD analysis: rising inflation fuels speculation of a BOE's hike
|GBP/USD Current price: 1.2482
The GBP/USD pair trades at its highest since late February, having extended its intraday advance up to 1.2493 and ending the day some 10 pips below this last. The Pound soared after the release of UK inflation data, as consumer prices rose far beyond expected. Yearly CPI hit 2.3% in February from 1.8% in January, while monthly basis, inflation surged by 0.7& from a previous decline of 0.5%. Core yearly inflation jumped to 2.3%. Producer prices rose less than expected, but remained high in the same month, while the Retail Price Index jumped to 3.2% YoY. The readings came less than a week after the BOE shifted to a hawkish stance, with Christine Forbes voting for a rate hike and with the rest of the MPC not far below her, ending up fueling speculation that the BOE will have to raise rates rather sooner than later. The 4 hours chart shows that technical indicators have lost upward momentum, turning flat in overbought territory, although given that the price holds near its daily high, chances of a downward corrective move are limited. In the same chart, the 20 SMA heads sharply higher some 100 pips below the current level, reflecting the strength of the intraday advance. The pair has settled above 1.2425 the 38.2% retracement of the January rally and the critical support, as the bullish stance will likely persists as long as the price remains above it.
Support levels: 1.2345 1.2300 1.2260
Resistance levels: 1.2425 1.2470 1.2510
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