GBP/USD experienced a slight slip, but the extent of losses remained limited despite the UK’s Consumer Price Index (CPI) coming in weaker than expected. Analysts at Scotiabank offer insights into the pair’s future trajectory.
For GBP/USD to gain strength, it must surpass resistance levels around 1.2725/1.2735.
The recent UK inflation data fell short of expectations, with February’s CPI rising by 0.6% month-on-month (compared to the anticipated 0.7%). Yearly inflation decreased to 3.4% (against the forecasted 3.5% and January’s 4.0%). However, core inflation slightly outperformed forecasts at 4.5% year-on-year, although services CPI was somewhat higher than expected at 6.1%.
Despite these developments, market indicators suggest that rate cuts are likely in August.
Scotiabank emphasizes the firm support expected around Tuesday’s low of 1.2668 for GBP/USD. There’sBelow this level, there’s a risk of further decline towards 1.2625/1.2635. However, for Sterling to strengthen, it needs to break through the resistance at 1.2725/1.2735, which has proven to be a barrier to advances in the past 24 hours.