The British Pound (GBP) surged to a new yearly high above 1.3000 against the US Dollar (USD) on Wednesday, fueled by higher-than-expected UK inflation data for June. The persistent price pressures, particularly in the service sector, have solidified expectations of further interest rate hikes by the Bank of England (BoE).
Market Reactions and Outlook
The unexpectedly stubborn inflation figures, with both headline and core inflation remaining elevated, have diminished hopes of an early interest rate cut by the BoE. Market participants are now eagerly awaiting the upcoming UK employment data for further clues on the BoE’s policy trajectory.
Meanwhile, the US Dollar remains under pressure despite better-than-expected retail sales data for June. Markets are still pricing in a high probability of a Fed rate cut in September, with the potential for further easing later in the year.
GBP/USD Technical Analysis: Bullish Momentum Accelerates
The GBP/USD pair has decisively broken above the key resistance level of 1.3000, with technical indicators suggesting further upside potential. The pair is now targeting the two-year high near 1.3140, supported by strong bullish momentum.
The upward-sloping Exponential Moving Averages (EMAs) and the 14-period Relative Strength Index (RSI) nearing 70.00 reinforce the bullish outlook for the GBP/USD pair.
Key Points:
- GBP/USD reaches new yearly highs on sticky UK inflation data.
- Expectations for BoE rate cuts diminish, boosting the Pound.
- US Dollar weakens despite positive retail sales figures.
- Fed rate cut expectations remain firm.
- GBP/USD technicals confirm bullish breakout and upward momentum.
