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GBP/USD is halting after some inflation figures for May fell short of early expectations. Headline CPI printed an annual rise of 4.5%, exactly as expected, but Core CPI and the Retail Price Index fell short of expectations.

Annual CPI printed 4.5% for a second month in a row. This comes despite a drop in commodity prices. Core CPI was expected to squeeze from 3.7% to 3.6% but fell down to 3.3%. No second round effects this time? The Retail Price Index (RPI) remained unchanged at 5.2% and didn’t rise as expected.

GBP/USD rallied earlier, and this was now capped at 1.6440, under the 1.6470 resistance line. The pair is now trading at 1.64.

Inflation took a breather two months ago as the headline CPI figure dropped to an annual rate of 4%. But this was quite short-lived: in April price rises made a big comeback, with CPI reaching 4.5% once again. Also the other inflation figures, Core CPI and RPI jumped higher, showing that inflation wasn’t limited to oil and food prices, but had “second round effects”.

Earlier this week, the pound managed to recover some the losses it had last week. GBP/USD managed to break back above the region of 1.6280 to 1.63 and stood on around 1.6420 before the publication.

Resistance is at 1.6470 and 1.6530. Support is at the 1.6280 – 1.63 region, followed by 1.62 and 1.6110. For more on the pound, see the GBP USD Forecast.