GBP Rally Continues
The British Pound is trading firmly higher today on the back of the latest UK inflation figures released this morning. UK annualised CPI was seen holding steady at 2% on the headline reading last month with core inflation holding steady at 3.5%. The readings saw a softening in traders’ BOE easing expectations, with projections for an initial BOE cut moving to September now from August prior. On the back of the recent uptick we saw in growth data, the loss of downside momentum in June CPI has added some near-term uncertainty for doves with traders no banking that the BOE will hold rates level through the summer before easing in Q3.
Bullish GBP View
Looking ahead, risks are tilted to the upside for GBP. If we see inflation continue to hold around current levels, or move higher, this will likely see easing expectations further scaled back. A weaker US Dollar is also feeding into GBP strength here with the greenback lower on the back of the recent inflation drop in the US which has seen September Fed easing expectations soar. While this dynamic (heightened near-term Fed easing expectations/reduced BOE easing expectations) persists, GBPUSD looks likely to continue higher near-term.
Technical Views
GBPUSD
The rally in GBPUSD has seen the pair breaking above key resistance at the 1.2832 and above the bear trend line. While above this area, and with momentum studies bullish, the focus is on a further higher and a test of the 1.3136 level next.
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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.