GBP/USD Halts Close to 1.3140 Following a Sheer Upside. Attention Focuses on Michigan CSI
Consolidation After Movement
The pair of the British pound sterling and the US dollar has been oscillating within a tight range of 1.3129 to 1.3145 following a bold period of the rally from its low of Wednesday, which was at 1.2981. The little consolidation that came after the vertical and strong upside movement is revealing an ongoing formation of more rallies.
GBP/USD price chart. Source TradingView
The pair has been going much higher in the market than it was expected to go, as declared by the United Kingdom’s inflation data released on Wednesday. The United Kingdom’s Bureau for National Statistics published the country’s consumer price index to be at 7%, turning out to be higher than the 6.7% forecast. Whereas the central consumer price index came in at 5.7%, going higher than the speculated 5.4%.
The higher consumer price index of the United Kingdom makes it obvious that households in the country are under a lot of price pressure as the cost of energy and food items keep getting higher as a result of the economic fallout from the ongoing war between Russia and Ukraine. These prices are set to go higher as Western leaders come to a consensus on banning oil imports from Russia.
Bank of England More Likely to Raise Rates
Equally, there are now more chances that there would be a fourth increment in interest rates by the Bank of England. In addition to the surging inflation rates, the stagnant labor market situation in the United Kingdom would also give more momentum to the possibility of another interest rate increment by the Bank of England in the month of May.
On the other hand, the US dollar index is looking at the possibility of more decline as there has been an improvement in investors’ risk appetite over the last couple of days. The dollar index has fallen to almost 99.60 as it eased by nearly 1% from the 100.52 point it was as of Wednesday.
On a final note, there will be more focus on the side of investors on the consumer sentiment index coming from Michigan. It is expected that the University of Michigan would print the consumer sentiment index at 59, under the previous print of 69. Aside from the consumer sentiment index from Michigan, the market will equally keep an open eye out for the retail sales of the US released every month. They are currently expected to be at 0.6%