GBP/USD: struggling with 1.3900 as enthusiasm over a rate hike eases
|GBP/USD Current price: 1.3903
- Uptick in YoY CPI backs the case of higher rates sooner in the UK.
- GBP/USD recovery seen so far corrective, bullish only above 1.4000.
The British Pound got a boost from UK inflation figures, as higher-than-expected figures backed the case of a soon to come rate hike in the kingdom. Inflation remained steady at 3.0% yearly basis in January, against expectations of a slide to 2.9%. Mounting inflationary pressures are no good for the local economy, but with BOE's statement fresh in traders' minds, the Sterling found market's favor. Adding to GBP/USD's recovery is the ongoing dollars retracement on easing yields. Producer Prices in the UK were down in January, while the Retail price index fell by more-than-expected in the same month, down by 0.8%, somehow balancing the uptick in YoY CPI.
From a technical point of view, the recovery remains corrective, with the bearish pressure easing short term, albeit a recovery above the 1.4000 threshold is required to talk about a bullish Pound. In the 4 hours chart, the pair is now developing above its 20 SMA and 200 EMA, both lacking directional strength, while technical indicators have entered positive territory, the Momentum maintaining its upward slope, but the RSI is losing momentum around 52, blurring chances of a firmer recovery.
Support levels: 1.3875 1.3840 1.3800
Resistance levels: 1.3920 1.3950 1.3990
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