- GBP/USD has been consolidating over the last couple of days.
- The pair formed a hammer setup following the United Kingdom produce & consumer inflation data.
- Data revealed inflation climber to multi-decade peaks.
GBP/USD saw its price sideways following the somewhat massive United Kingdom inflation data. While publishing this blog, it trades at 1.2234, levels it has navigated over the past couple of days. The pair hovered around 2.5% beyond last week’s lowest mark.
UK Inflation Surging
The Bank of England remains of interest as the nation stares at stagflation. Wednesday’s data indicated the nation’s inflation remained elevated in May amid accelerated food and energy prices. Reports from the ONS (Office of National Statistics) show that headline CPI (Consumer Price Index) climbed to May’s 9.2% from 9% in April this year. The surge matched most predictions by financial analysts.
Barring the volatile energy and food prices, inflation fell to 5.9% from 6.2%. Meanwhile, the nation’s headline & core inflation declined in May as far as MoM is concerned. For now, analysts trust the headline CPI will remain elevated and hit double digits within the upcoming months. That corresponds to BOE’s guidance, forecasting inflation surges to 11%.
Meanwhile, the Bank of England remained concerned as the latest rate increases haven’t eased inflation. Remember, it has introduced five 0.25% hikes since December. Another worry is further rate surges won’t continue to drag the United Kingdom economy.
The latest data indicates that most economic sectors are struggling. For instance, retail sales saw a sharp plunge in April, while housing demand began easing. Bloomberg analysts stated that the Bank of England opened the path for further actions than 25bp after suggesting forceful action amidst signals of persistent inflationary pressure. Such remarks triggered massive fear sentiment within the marketplace.
According to the 2hr chart, GBP/USD price created a minor hammer formation following the recent United Kingdom inflation data. Such price actions reveal bullish signals. Furthermore, the pair climbed beyond 25- and 50-period MAs.
GBP/USD remains within the 38.2% and 50% FIB retracement mark. Thus, the GBP-USD exchange rate might witness a bullish move in the upcoming days.