GBP soars on BoE, US inflation picks up

The British pound rallied to post a fresh one-year high, riding on the back of hawkish comments from the Bank of England. Despite the weak wage growth dampening investor sentiment, the Bank of England said that interest rates like to rise in the coming months. The comments helped fuel the rally in the British pound which was seen briefly trading at $1.3400.

In the US trading session, the monthly inflation data showed an increase in headline consumer prices. Rising at a pace of 0.4%, it was the largest monthly increase since January this year. On a year over year basis, US consumer prices were seen rising 1.9% in August. While the US dollar managed to post some gains, the currency was still trading weaker against its peers.

Looking ahead, the last trading day of the week will see the release of the monthly retail sales figures from the US Core retail sales are expected to rise 0.5% on the month, while headline retail sales are expected to moderate, rising 0.1%. This comes after the retail sales surged 0.6% the month before.

EURUSD intraday analysis

EURUSD (1.1911): The EURUSD posted a 10-day intraday low yesterday before pulling back to close on a bullish note. Price action remains strongly consolidated above the support level of 1.1882. The bounce off this level yesterday marks a test of support at this level. Further declines can only be expected on a breakdown of this support level. This puts EURUSD on a likely sideways range in the near term above 1.1822 and below 1.2058. Any near term gains will, however, struggle to breakout from the minor resistance seen at 1.1962 and 1.1947.

GBPUSD intraday analysis

GBPUSD (1.3392): The British pound continued to push higher as price rallied close to the 1.3400 handle. Support at 1.3236 remains a level area which could be tested on a decline as this level previously served as resistance. To the upside, the momentum could be seen easing off into the weekend. With the downside well supported, the GBPUSD could remain biased to the upside. However, watch for the support at 1.3236 which will be critical for price action. Failure to hold the declines here could push GBPUSD back lower to test the support at 1.3161 initially.

XAUUSD intraday analysis

XAUUSD (1331.02): Gold prices continue to remain trading flat with price action seen trading subdued. Yesterday's session saw gold prices supported near 1324.72. This puts the bias to the upside with the target of 1345.87 in sight. Given that there is an unfilled gap at this level, gold prices could be aiming to close this gap. However, the gains are likely to come by next week, closer to the FOMC meeting. To the downside, the support at 1324.72 remains a key level as a break down below could signal further decline towards 1300.86.