Sterling hits 2025 high above $1.2630 before inflation shocks markets
Press Hub UCapital
Share:
UK inflation spikes to 3% shaking gbp rally
The GBP/USD pair hit a 2025 high of $1.2630 early wednesday before tumbling 0.2% after UK inflation came in hotter than expected. January’s consumer price index (cpi) rose 3%, beating forecasts of 2.8% and accelerating from 2.5% in december. The pound initially surged on strong momentum but quickly reversed as traders reassessed the bank of england’s (boe) rate path.
Boe faces renewed policy dilemma
Inflation’s unexpected jump is complicating the boe’s rate cut plans, with markets now questioning how soon policymakers can ease monetary conditions. Food prices, particularly meat, bread, and cereals, were the main drivers of inflation, while services inflation rose 5%, slightly below expectations of 5.2%. The challenge is clear—the economy is slowing, but persistent inflation may delay any rate relief.
Sterling outlook
Can bulls regain control? forex traders were caught off guard, as higher inflation typically supports a currency by reducing the likelihood of rate cuts. However, GBP/USD slipped back to $1.2610, with volatility expected to continue. The next key resistance sits at the 100-day moving average ($1.2671), while a double top pattern is forming near the 200-day moving average at $1.2787. On the downside, support remains at $1.2550-$1.2580.
The GBP/USD pair hit a 2025 high of $1.2630 early wednesday before tumbling 0.2% after UK inflation came in hotter than expected. January’s consumer price index (cpi) rose 3%, beating forecasts of 2.8% and accelerating from 2.5% in december. The pound initially surged on strong momentum but quickly reversed as traders reassessed the bank of england’s (boe) rate path.
Boe faces renewed policy dilemma
Inflation’s unexpected jump is complicating the boe’s rate cut plans, with markets now questioning how soon policymakers can ease monetary conditions. Food prices, particularly meat, bread, and cereals, were the main drivers of inflation, while services inflation rose 5%, slightly below expectations of 5.2%. The challenge is clear—the economy is slowing, but persistent inflation may delay any rate relief.
Sterling outlook
Can bulls regain control? forex traders were caught off guard, as higher inflation typically supports a currency by reducing the likelihood of rate cuts. However, GBP/USD slipped back to $1.2610, with volatility expected to continue. The next key resistance sits at the 100-day moving average ($1.2671), while a double top pattern is forming near the 200-day moving average at $1.2787. On the downside, support remains at $1.2550-$1.2580.