The Bank of England faces rising core inflation, with a recent increase to 6.2% from 5.8% in January. Service-sector inflation is a concern, with hospitality inflation proving difficult to combat. The Bank is paying close attention to inflation numbers and is likely to announce a 25bp rate hike tomorrow, but will reiterate its commitment to using tools for financial stability. If broader inflation data continues to improve, the Bank may pause at the next meeting in May.
The daily GBPUSD candlesticks are trading in their bullish channel between the upper blue and red bands. Moreover, the red Bollinger bands are pulling away from each other as volatility increases. The daily RSI is above 50 (blue ellipse), which is on the bullish side of the oscillator.
GBPUSD's hourly EMAs show good angle and separation to the upside following the CPI release. Its stochastic has moved into its upper quintile. The longer it maintains this position (green rectangle), the greater the likelihood of further price appreciation.
The Fed Announcement
Caution is warranted ahead of the Fed announcement at 6:00pm GMT, when it will likely raise rates by 25 bps and release its dot plot forecast. This has the potential to affect the GBPUSD pair.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.