British pound increased higher after inflation decreased

Jun 19

The British pound (GBP) edged higher above the 1.2700 round resistance level on Wednesday after the Office for National Statistics (ONS) of the United Kingdom (UK) showed that price pressures had eased as expected in May. 5. UK annual inflation returned to the central bank's 2% target for the first time in more than three years from April's 2.3%. During the same period, the core Consumer Price Index (CPI), which excludes volatile food and energy prices, fell to 3.5% from 3.9% previously.

Monthly headline inflation rose steadily 0.3% but was below estimates of 0.4%. The report also showed that the annual Producer Price Index (PPI) for Core Output rose a significant 1.0% in May, compared with a 0.3% increase a month earlier.

Despite the annual CPI falling to 2%, Bank of England (BoE) policymakers may not be comfortable with discussions of cutting interest rates soon because of epidemic inflation. The annual crop has barely slowed down. Inflation in the services sector increased by 5.9%, slightly lower than the previously announced 6.0%, but nearly double the level needed to contain price pressures.

The next trigger for the Pound will be the BoE's monetary policy decision, to be announced on Thursday. The BoE is widely expected to keep interest rates unchanged at 5.25%. Therefore, investors will focus on vote division and new signals on when the BoE will start cutting interest rates.

Resistance: 1.275
Support: 1.266

Jun 20

Trade active

Jun 20

Note

Hit TP for plan SELL

Jun 21

Trade closed: target reached

GBP/USD falls into familiar lows as Friday looms with key UK data print
GBP/USD is poised for a bumper Friday session. Key UK data is due during the European market session, and US Purchasing Managers Index activity surveys set to wrap up the trading week. The Bank of England held rates at 5.25% this week, with a stubbornly tepid stance on rate cuts that deflated broad-market rate cut expectations.