Mervyn King finally changed his tone about inflation, and sent the British Pound above a critical resistance line. Update on the rising sterling. Mervyn King and inflation – Background Mervyn King, governor of the Bank of England, dismissed the rising inflation in Britain for a long time. British inflation passed the government’s target range of 1-3% a long time ago. But King still saw the darker sides of the economy. Even when he was forced to write an inflation letter to the Chancellor of the Exchequer (Alistair Darling at that time), he blamed the rising prices on high oil prices, and played a big role in holding the pair down. But now the tables have turned. Just this Friday, the initial release for British GDP showed a growth rate of 1.1% in Q2, almost double the early expectations. Together with the improvement in employment, there are already lots of good signs for the British economy. Things are changing also inside the bank. In the past two meetings of the MPC, one member, Andrew Sentance, voted for raising the rates. He was the sole member to think so, but he’s backed by the new Prime Minister, David Cameron. And now, also Mervyn King acknowledges the rising inflation, and warned about it in an official appearance. In the same appearance, he also hinted that the interest rate wouldn’t rise soon back to “normal” levels. But while it won’t rise to “normal” levels, it could still rise. GBP/USD Jumps The Pound faced a strong hurdle at 1.5520. This line was the highest point in February, and proved to be a strong line, succeeding in stopping the Pound time after time. But now this line was broken – GBP/USD currently trades at 1.5630, jumping above this level and leaving dust behind it. The next level to watch is 1.5720, which was a support line in 2009, when the pair traded at a high range for a very long time. But a more significant line stands higher – 1.5833 – this was the support line that held GBP/USD before it collapsed to lower levels, and also worked as a resistance line when the pair made an attempt to recover. If this line is broken, the road is open to the round number of 1.60, and the resistance line at 1.6070. If the pair reverses its moves, immediate support is found at 1.5470, a line that was a resistance line not long ago, and 1.5350 – a pivotal line many times in the past. Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Forex News Today: Daily Trading News share Read Next Forex Daily Outlook – July 29 2010 Anat Dror 12 years Mervyn King finally changed his tone about inflation, and sent the British Pound above a critical resistance line. Update on the rising sterling. Mervyn King and inflation - Background Mervyn King, governor of the Bank of England, dismissed the rising inflation in Britain for a long time. British inflation passed the government's target range of 1-3% a long time ago. But King still saw the darker sides of the economy. Even when he was forced to write an inflation letter to the Chancellor of the Exchequer (Alistair Darling at that time), he blamed the rising prices on high oil prices,… Top Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.