GBP/USD was showing bullish momentum last week, pushing above the resistance zone at around 1.2450 which had rejected the price twice in December and January. But, buyers couldn’t hold the price above there and this pair reversed lower after some decent data from the US.

Looking at the GBP/USD daily chart, it appears that the buyers attempted to break out of the range but were unable to sustain it. Despite this, the uptrend remains intact on the daily chart as moving averages are turning into support. The 20 SMA (gray) held the decline yesterday and we saw a small bounce.

The UK average earnings remained steady at 5.9% in Q1, against a slowdown to 5.1%, which helped keep the GBP afloat. Although today’s inflation report showed a cool-off but consumer inflation CPI still held above 10% for the first time since June 2022.

UK March Consumer Price Index Inflation Report

• March CPI YoY +10.1% vs +9.8% expected
• February CPI YoY was +10.4%
• CPI MoM +0.8% vs +0.5% expected
• Prior zCPI MoM +1.1%
• Core CPI YoY +6.2% vs +6.0% expected
• Prior core CPI YoY +6.2%
• Core CPI MoM +0.9% vs +0.6% expected
• Prior core CPI MoM +1.2%

UK headline annual inflation continues to sit in double-digits with core annual inflation remaining unchanged in March when compared to February. The monthly readings also come in hotter-than-expected and this continues to exert further pressure on the BOE to hike rates next month.

Looking at the details, the upward contributions to monthly inflation are from food prices, and recreation and culture – offset by downward contributions from motor fuels, and housing and household services.

GBP/USD Live Chart