GBP/USD vaulted higher on Wednesday after U.S. headline and core inflation undershot forecasts, pushing cable above the 10- and 55-day moving averages and allowing traders potentially to target the 30-day Bolli at 1.2272 and early June highs by 1.2292.
The CPI data tempered the markets' view of the Fed's near-term rate path, weighing on the dollar, and could lead to talk of a U.S. rate pivot, possibly fueling further cable gains away from 2022's mid-July low at 1.1761.
Sterling rallied from NorAm open lows by 1.2094 to 1.2237, and traders may aim for the June 16 high at 1.2405 and the June 7 high at 1.2600 if they overcome the upper 30-day Bolli and early June highs.
However, they must contend with UK-specific headwinds, including Britain's complicated growth-inflation picture.
Should UK inflation -- due out on Aug.
17 -- continue higher, as the BoE expects, growth uncertainties may temper further GBP gains despite the possibility of a converging rate path with the U.S.
Also, the U.S. inflation report is just is just one data point, and rising U.S.
earnings and wages may keep price growth elevated.
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