GBP/USD rose on Wednesday after data showing UK inflation nL2N2NY0JIunexpectedly rose above the BoE's 2% target, advancing beyond 1.4100 and flirting with 10- and 30-day resistance near 1.4130 and emboldening bulls for further gains.
The upbeat UK inflation outlook reversed Tuesday's weakness related to UK reopening delays, re-igniting UK rate hike expectations to potentially fuel a cable move back near June highs by 1.4250.
UK inflationary pressures are not unique, aspandemic base effects skew data in all economies, leaving global central bankers biased toward treating this price-growth acceleration as transitory until economies normalize.
Wednesday's Fed rate decision and news conference is likely to underscore the transitory view.
Sterling's inability to fall far from its June 1, 2021, high by 1.4250, with support firm by Tuesday's 1.4035 low and 55-DMA by 1.4001, should encourage bulls to consider new highs, especially if British inflation proves to be more entrenched, as outgoing BoE Chief Economist Andy Haldane suggested recently, and leads U.S. and UK rate hike expectations diverge.
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