British Pound (GBP) Price Outlook: GBP/USD Advancing After UK Inflation Data
GBP price, news and analysis:
- GBP/USD is climbing after UK inflation data for August showed the highest jump on record.
- Combined with Tuesday’s strong UK employment numbers, the inflation figures will add to the pressures on the Bank of England to taper its stimulus program and therefore to upwards pressure on GBP.
GBP/USD rallying after strong UK inflation data
GBP/USD is edging higher again after UK inflation numbers for August showed a surge in the headline rate, taking it to 3.2% year/year: above both the previous 2.0% and the 2.9% consensus forecast of analysts polled by the news agencies. Core inflation was up by more than expected too.
UK inflation data
Source: DailyFX economic calendar
With both UK employment and inflation growing faster than predicted, more members of the Bank of England’s monetary policy are likely to turn hawkish, potentially brining closer the day when the Bank will tighten UK monetary policy.
As a result, GBP/USD has recovered around half the falls recorded in US trading hours Tuesday, although it now faces resistance around 1.3850 from a trendline that was once support but could now act as resistance.
GBP/USD Price Chart, One-Hour Timeframe (September 3-15, 2021)
Source: IG (You can click on it for a larger image)
Next up this week will be Friday’s UK retail sales data, expected to reveal a 2.7% increase year/year in August. Given the employment and inflation numbers, however, there must be a risk of the numbers exceeding expectations despite continuing fears for global growth reinforced by the latest data from China that showed both industrial production and retail sales below forecasts year/year last month.
--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.