UK Inflation Soars As Fuel Costs Spike
UK Inflation Rises
GBPUSD is a little higher today after the latest UK economic data confirmed a fresh rise in inflation. Headline annualised CPI in the UK rose to 3.3% last month, in line with expectations, up from 3% prior, though core CPI was seen cooling to 3.15 from 3.2% prior (and expected). The data serves as worrying evidence of the impact of the Iran war on prices in the UK. In particular, transport costs were seen rising 4.7% % on the month, their fastest increase since December 2002, as a result of higher fuel costs. Motor fuels in particular were seen soaring 4.9% n the month with the average price of petrol jumping 8.6 pence per litre and diesel up by 17.6 pence per litre.
BOE Expectations
Looking ahead to next week, there seems to be no major change in traders’ outlook for the BOE. A tepid response in GBP suggests that the BOE is widely expected to hold rates steady, though hawkish warnings from the bank could provide some lift for GBP next week. The key thing near-term will be tracking the moves in energy prices. If prices remain elevated, UK inflation will certainly rise further, putting greater pressure on the BOE as we move into the summer, increasing the chances of a rate hike. In this scenario. GBP is likely to stay supported near-term.
Technical Views
GBPUSD
For now, the pair remain above the 1.3446 level following the bounce off the rising trendline from 2025 lows. With momentum studies bullish, focus remains on a continuation higher while above this level with 13774 the next target for bulls. If we break lower, 1.3238 and the bull trend line will be the key support zone 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.