- UK inflation remained steady at 6.7% in September.
- Markets anticipate the Bank of England to maintain its interest rates at 5.25% on November 2.
- Core UK inflation declined less than expected to 6.1% in September.
The tides favor the bulls in this Wednesday’s GBP/USD forecast. The British pound is resilient as it surges forward, fueled by the unexpected twist in the UK inflation story. Against all odds, inflation stood at 6.7% in September, defying expectations of a dip to 6.6%. Consequently, it paves the way for higher interest rates despite predictions for a decline.
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Nevertheless, financial markets still anticipate the Bank of England to maintain its interest rates at 5.25% on November 2. Ian Stewart, the chief economist at Deloitte, commented, “The UK is struggling to reduce inflation, outpacing other major industrialized nations. As such, interest rates will likely remain near current levels for much of the coming year.”
Moreover, Wednesday’s data indicated that core inflation, which excludes volatile food, energy, alcohol, and tobacco prices and provides insights into underlying price trends, declined less than expected to 6.1% in September from August’s 6.2%.
Meanwhile, services price inflation, another component studied by the BoE, increased to 6.9% in September from 6.8%.
In October 2022, British consumer price inflation reached a 41-year peak of 11.1%. This was primarily due to surging European energy prices resulting from Russia’s invasion of Ukraine. Notably, British consumer price inflation remains the highest among advanced nations in the Group of Seven.
GBP/USD key events
After the UK inflation report, investors will focus on reports from the US, like
- The US building permits report.
- The crude oil inventories report.
GBP/USD technical forecast: Bulls Ascend to retest the 30-SMA resistance.
The pound has risen after finding support at the 1.2150 key level. Bulls are retesting the 30-SMA resistance. At the same time, the RSI has risen to the pivotal 50 level as bulls attempt a takeover.
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However, the general bias remains down as the price trades below the 30-SMA. If the SMA holds as resistance, the price will bounce lower to retest the 1.2150 support. Moreover, a break below this level would strengthen the bearish bias by making a lower low. However, bulls will take over if the price breaks above the 30-SMA.
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