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UK inflation remains at multi-decade highs, and GBP/USD is up -by Ecork

GBP / USD – rates, charts and analysis

  • UK headline inflation touched 9.1% y/y.
  • GBP/USD is drifting lower on the back of a stronger US dollar.

Price pressures in the UK remain inflated and are at their highest levels in several decades. The latest inflation report from the Office for National Statistics (ONS) showed that the annual general inflation rate reached 9.1%, in line with market expectations, while monthly inflation rose by 0.7%. The annual number is the highest reading since the series began in 1997.

Core inflation in May fell to 5.9% on an annual basis from 6.2% in the previous month. CPI including owner housing costs rose 7.9% in the 12 months to May 2022, up from 7.8% in April.

For all market-moving economic data and events, please refer to DailyFX Calendar

Today’s data will continue to pressure the Bank of England to raise interest rates aggressively. The Bank of England (BoE) recently warned that inflation could reach 11% this year before declining. The Bank of England will need to weigh how to keep the economy expanding while also putting pressure on inflation.

The GBP/USD pair remained slightly changed to a slight decrease, mainly due to the strength of the US dollar. Later today, we have Fed Chairman Jerome Powell’s first testimony, and this is likely to be the main driver of today’s price action. GBP/USD is still inside the bullish candle of last Thursday – 1.2040 / 1.2405 – while the resistance area around 1.2340 will provide initial resistance.

GBP/USD daily price chart – June 22, 2022

GBP: UK inflation remains at multi-decade highs, GBP/USD rallies

Retailer data show 71.25% of traders are net long with the ratio of long to short traders at 2.48 to 1. The number of long traders is down 2.28% from yesterday and 14.38% down from last week, while the number of short traders is up 10.21% from yesterday and 48.41% higher than last week.

We usually take a conflicting view with crowd sentiment, and the fact that traders are holding suggests that GBP/USD prices may continue to fall. However, traders have less net long positions than yesterday and compared to last week. Recent changes in sentiment warn that the current GBP/USD price trend may reverse upwards soon despite the fact that traders are still net.

what is your opinion of The British pound – Ascending or descending? You can let us know via the form at the end of this piece or you can contact the author via Twitter hahahahahaha.

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