The GBPUSD is trying to extend recovery. As the UK government seeks to implement fiscal instruments in the fight against high inflation. After the British announced further economic measures such as salary cuts for public sector employees. The GBPUSD pair rebounded after staying solidly supported at 1.2700. To combat sticky prices, the British government also pushed businesses to reduce profit margins. This may show concerns about a grim economic picture.
Last week, the Bank of England (BoE) announced a 50-basis-point rate rise due to higher-than-expected. Headline inflation in the United Kingdom and new highs in the core Consumer Price Index (CPI). Headline inflation remained higher than expected. As strong sales of used cars offset a drop in energy prices.
The GBPUSD recovered as rate rises are predicted.
The United Kingdom’s economic future is jeopardized as Bank of England Governor Andrew Bailey unexpectedly hiked interest rates by 50 basis points (bps) to 5%.
The Bank of England was compelled to announce significant rate rises after UK inflation proved to be more continuous than projected.
The inflation rate in the United Kingdom was 8.7%, as rising costs for recreational cultural products and services, air travel, and used auto mobiles more than offset the slight reduction in high food inflation and declining petrol prices.
Despite the central bank’s continuous policy tightening efforts, core inflation is rising and has reached new highs of 7.1%.
Technical Analysis
The GBPUSD is expected to break over the 1.2740 resistance level. Pound Sterling is gaining momentum in preparation for a bold advance above the immediate resistance level of 1.2740.
The Cable is gaining support at the support of 1.2700; nevertheless, efforts may be futile as the US Dollar Index (DXY) recovers from a corrective move.
The Pound Sterling is experiencing mean reversion. phase and is predicted to find support near the daily Exponential Moving Average (DEMA) of 20 periods. If the GBPUSD fails to maintain support around 1.2700, the downside bias might worsen. While Pound Sterling bulls may resurface if Cable rises above 1.2800.
