Pound Sterling Strengthens Following Hot UK Inflation Data

: George Solotarov; 18 September 2024; Hits: 74

Pound Sterling Strengthens Following Hot UK Inflation Data

The Pound Sterling (GBP) has gained value against its major peers, driven by stronger-than-expected UK inflation data for August. The data suggests that the Bank of England (BoE) may maintain its current interest rate stance.

UK Inflation

The UK's core Consumer Price Index (CPI) rose by 3.6% in August, exceeding expectations. Services inflation also rose sharply, indicating persistent inflationary pressures.

Fed Monetary Policy

The Federal Reserve (Fed) is expected to announce a rate cut at its meeting on Wednesday. While a 50 basis points (bps) cut is still possible, the CME Fedwatch tool shows a higher probability of a 25 bps cut.

Economic Data

Investors will focus on the Fed's monetary policy decision, including the dot plot and economic projections. Additionally, US Building Permits and Housing Starts data for August came in higher than expected.

Technical Analysis

The GBP/USD pair has broken above the 20-day Exponential Moving Average (EMA), indicating a bullish trend. The 14-day Relative Strength Index (RSI) is around 60.00, suggesting potential upside momentum.