Recent inflation data coming from the UK has already had a significant impact on the pound sterling. There is high inflation, as the data has indicated, and the pound rallies considerably on several metrics.
For one, the GBP/USD currency pair has experienced a sudden shift for the past few days. This follows a period of relatively stable prices that had been awaiting inflation metrics in the UK. The Core CPI has stayed at 6.9%, whereas analysts had forecast 6.8%. There are further indicators helping the situation. Wage growth is a main contributor and has, therefore, ensured that consumer spending would remain high, buoying prices. The core price pressure reached a high point of 7.1% and has remained near there.
This has had further consequences for the decisions financial institutions are making. The persistent CPI has made the Bank of England contemplate continuing on its current path with interest rates. It has been controlling interest rates tightly recently, recently moving them up to 5.25%. Analysts believe they will persist with this path, and the pound rallies will continue.
Navigating Inflation Trends and Pound’s Exchange Rate: Insights and Predictions
Inflation has been reducing over July, fortunately. Lower oil prices have given consumers more breathing room, bringing inflation down with it. However, the inflation was still relatively high over July, significantly affecting the pound.
Some analysts appear confident that the best pound to dollar exchange rate will climb over the 1.27 resistance level. It is likely that we will see it go as high as 1.275 over the coming days, in its three-day average, as the pound rallies. We will have to see what will occur further afield. It has managed to get to its 50-day average of 1.274 but is still performing poorly in comparison to its 20-day average. Another indicator, the RSI, is worth looking at, measuring the speed of price changes. This indicator has gone down close to 40. Dropping below this point will make for a more wary market for the pound, possibly leading to a pound crash.
