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It was another busy morning for the Pound, with UK inflation drawing plenty of market interest.
In June, the annual rate of inflation accelerated from 9.1% to 9.4% versus a forecasted 9.3%. The upswing followed UK wage growth and unemployment figures on Tuesday and hawkish chatter on monetary policy.
Bank of England Governor Andrew Bailey spoke at the Mansion House Financial and Professions Services Dinner (4pm BST). BoE Governor Bailey reportedly talked of the BoE considering a 50 billion Pound reduction of its government bond holdings over a 12-month period.
Bailey also said,
“A 50-basis point increase will be among the choices on the table when we next meet. 50-basis points is not locked in, and anyone who predicts that is doing so based on their own view.”
There are no scheduled Monetary Policy Committee member speeches for the markets to look out for today.
GBP/USD Price Action
At the time of writing, the Pound was up 0.13% to $1.20085.
This morning, the Pound fell to an early low of $1.19859 before rising to a high of $1.20378.
Technical Indicators
The Pound needs to avoid the $1.1988 pivot to target the First Major Resistance Level (R1) at $1.2051.
Following hawkish MPC member chatter, a pickup in market risk appetite would support a breakout from the Tuesday high of $1.20455.
An extended rally would test the Second Major Resistance Level (R2) at $1.2108 and resistance at $1.2150. The Third Major Resistance Level (R3) sits at $1.2229.
A fall through the pivot would bring the First Major Support Level (S1) at $1.1930 into play.
Barring an extended sell-off, the Pound should steer clear of sub-$1.19 and the Second Major Support Level (S2) at $1.1868. The Third Major Support Level (S3) sits at $1.1747.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal.
At the time of writing, the Pound sat above 100-day EMA, currently at $1.20063.
The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, which were GBP/USD positives.
A hold above the 100-day EMA would support a move through R1 to bring R2 and the 200-day EMA, currently at $1.21359, into play.
The US Session
It is another quiet day ahead on the US economic calendar. Housing sector data, including existing home sales, are in focus later today. However, we don’t expect the numbers to influence the GBP/USD.
This article was originally posted on FX Empire