GBP/USD jumps 30 pips as UK CPI rises to highest since March 2012

GBP/USD jumped 30 pips to a fresh session high of 1.3380 after the UK Office for National Statistics data reported November CPI at 3.1 percent y/y; the highest level since March 2012. Markets were expecting CPI to print at 3 percent.

Meanwhile, the core CPI came in at 2.7 percent y/y as expected.

As of writing, the spot is trading at 1.3373. The Pound may remain well bid as the 10-year US-UK yield spread has narrowed slightly in the GBP-positive manner. The spread now stands at 116.4 bps vs. pre-data level of 117.1 bps. The spread had widened to 118 bps yesterday; its highest level since Aug. 15.

Still, the gains could be capped around the 5-day MA of 1.3391 as Brexit uncertainty could force the BoE to go slow with policy tightening. Further, the USD may find takers ahead of tomorrow's FOMC rate decision.

GBP/USD Technical Outlook

Haresh Menghani, Editor and Analyst at FXStreet writes, "technically, the pair might now be eyeing for a bullish break through a short-term descending trend-line resistance near the 1.3535 region, above which the upward trajectory is likely to accelerate towards the 1.3600 handle en-route post-Brexit swing high resistance near the 1.3655-60 region, touched in September.

Alternatively, any profit-taking might now find immediate support near the 1.3480 region, which if broken could drag the pair back towards 1.3430-25 area en-route the 1.3385 strong support. A convincing break below the mentioned support levels might now negate any near-term bullish bias and turn the pair vulnerable to head back towards retesting the 1.3320 support area ahead of the 1.3300 handle."