- UK inflation remained steady at 3.0% in January, prompting speculation of a May hike.
- GBP/USD eases despite dollar's weakness after hitting a fresh weekly high.
The GBP/USD pair surged to its highest for the week mid-London morning, hitting 1.3923 following the release of UK inflation figures. Annual inflation remained steady at 3% in January against an expected fall to 2.9%, fueling speculation of an upcoming rate hike next May, particularly after BOE's statement last week. The Retail Price index eased in the same month, but remained high, at 4.0% from a previous 4.1%, while factory goods price inflation slowed amid food prices falling in January. Persistent dollar's weakness kept the pair around 1.3900 during the US session, but the fact that the Cable settled below the figure indicates that there are not much Pound bulls around. The UK won't offer any relevant news this Wednesday. Technically, the 4 hours chart shows that the price settled a few pips above its 20 SMA and 200 EMA, while indicators lost upward strength after entering positive territory, heading into the Asian opening with a neutral stance. An extension above the daily high could lead to an approach to the 1.4000 figure, although sustainable gains above the level are required to see a more constructive upward bias.
Support levels: 1.3840 1.3800 1.3770
Resistance levels: 1.3920 1.3950 1.3990
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