Pound Rallies As UK Inflation Jumps Again
Cable Pushing Higher
GBPUSD is pushing higher today with the pair now back at its highest level since May. The move comes amidst a weakening in the US Dollar this week ahead of tonight’s FOMC minutes and UK data today showing that inflation remains elevated.
UK CPI Rises Again
Focusing on the UK data, the latest CPI reading showed prices rising back up to 2.9% last month. While in line with forecasts, the move marks a clear increase on the prior month’s 2.6% reading. Looking at the breakdown of the data, the largest increase came from housing and household services mostly fuelled by the 14% lift in the Ofgem energy price cap last month. In terms of drag, transport and transportation costs had the largest negative impact, reflecting lower motor fuel costs on the back of the fall in prices over June. In terms of impact on BOE expectations, given that the lift was expected we haven’t seen much in terms of near-term tightening expectations rising. However, the door is open for the BOE to sound a little more hawkish at the next meeting which should keep GBP supported on the view that further tightening is still viable this year.
Technical Views
GBPUSD
The rally in GBPUSD has seen the market breaking out above the contracting triangle once again, surpassing the peak of the false break we saw July. Price is now fast approaching a test of the 1.3656 level and with momentum studies bullish, focus is on a continuation higher with 1.3774 the next target for bulls. To the downside, 1.3446 remains the key support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.