U.K. CPI Soared and Pulled GBP/USD at 1-Year High!
|The U.K. headline inflation rate soared in August and GBP/USD jumped to a fresh twelve-month high. After the biggest surge in clothes, in almost three decades, inflation rate climbed to 2.9% against an increase of 2.7% in July, while the core rate reached the highest level since 2011, at 2.7%. However, we wouldn’t expect Bank of England committee members to change their views for Thursday’s policy meeting. Just two of the policymakers voted for a rate hike in the previous interest rate decision and we would expect only these policymakers to vote for tightening again. The majority is expected to vote for leaving the policy on hold with bank rate at record low of 0.25% and to vote unanimously to keep the stock of U.K. government bond purchases at £435 billion, amid Brexit procedure.
GBP/USD Soared Sharply at 1-Year High Above 1.3265 Critical Level
The strength seen in GBP/USD over the last couple of hours drove the price above the key support level 1.3265 and posted a new one-year high at 1.3288. The daily chart shows that the pair has been in a clear uptrend since January. After the pair tested the diagonal line at 1.2775, rose more than 3.7% and surpassed the 50 and 100 SMAs.
Having the above in mind, if the buyers manage to maintain the price above the 1.3265, the next target for the pair will be the 1.3445 resistance barrier. Our bullish scenario is supported by the MACD oscillator, as it is moving upwards and above its trigger line, suggesting that the price is ready to push higher. Furthermore, the RSI indicator is rising above the 70 level and entered the overbought zone. Alternatively, a failure to end the day above 1.3265 could provide an opportunity to retest the key support level at 1.3000, and thus would negate any bullish scenarios for the pair.
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