The Pound Sterling Soars as UK Core Inflation Surpasses Expectations
- UK core CPI grows by 3.6%, exceeding the estimated 3.5%
- Headline inflation remains stable at 2.2% as predicted
- The Fed is gearing up for its first interest-rate cut in over four years
The Pound Sterling (GBP) has surged against major currencies following the release of the UK inflation data for August, which outperformed expectations. The Office for National Statistics (ONS) reported that the core Consumer Price Index (CPI), excluding volatile items, rose by 3.6%, surpassing the estimated 3.5% and accelerating from July’s 3.3%.
Key Highlights of the UK Inflation Data:
- Services inflation, a crucial indicator for the Bank of England (BoE), rose sharply to 5.6% from 5.2% in July
- Headline inflation increased by 0.3% on a monthly basis and 2.2% annually, meeting analysts’ expectations
The acceleration in inflation could influence market expectations regarding potential interest rate cuts by the BoE for the remainder of the year. Traders may adjust their bets based on the new data, potentially impacting the GBP’s performance against other currencies.
Daily Market Overview: Pound Sterling Outperforms US Dollar Ahead of Fed Meeting
- The GBP/USD pair nears 1.3170 post-UK inflation data release, targeting the immediate resistance level of 1.3200
- The Fed is expected to announce its first interest rate cut in over four years, with debates on the extent of the rate reduction
- Market attention shifts to the Fed’s policy normalization and key announcements post-rate decision
Technical Analysis: Pound Sterling Eyes 1.3200 Resistance Level
The GBP/USD pair approaches 1.3200 in European trading, maintaining a firm outlook above the 20-day Exponential Moving Average (EMA) near 1.3100. The Cable’s recent bullish momentum and RSI levels suggest potential upward movement in the near term.
Resistance levels at 1.3266 and 1.3500, with crucial support at 1.3000, indicate possible price movements for the GBP/USD pair.
Pound Sterling FAQs
Learn more about the Pound Sterling, its significance, and factors influencing its value:
- GBP is the oldest currency, accounting for 12% of global FX transactions
- BoE’s monetary policy decisions are key drivers of GBP value
- Economic indicators and data releases impact GBP’s performance
- Trade balance data also plays a significant role in influencing GBP’s value