The UK inflation report is being released shortly, and it’s likely that it forces the GBP pairs to move in either direction. Inflation numbers are pretty important when it comes to forex because it is one of the main reasons for the monetary policy of central banks.
This is particularly true for the UK right now. The UK economy has been quite uncertain in the last year due to the pre-Brexit process while inflation has been surging. The weaker Pound is one of the reasons for this, but not the main one though because GBP hasn’t declined much during this year after the massive move after the Brexit referendum.
So, this inflation we are seeing in the UK is coming from somewhere else. It jumped to 3% last month, and it is supposed to move higher to 3.1% this time. Although, the Bank of England already hiked the interest rates earlier this month, so I’m not sure the impact it may have on the GBP now that the big event is over.
If inflation still continues to climb with today’s number above 3.1%, then we might see another decent jump in GBP/USD. I don’t think the jump would be sustainable, so I will probably look to sell later in the day if that’s the case.