GBPUSD was lower on Wednesday despite higher inflation in the country.
That won’t help struggling households and a bond market rattled by government funding issues.
GBPUSD – Daily Chart
The Pound sterling rallied against the US dollar from the end of September but has hit an obstacle. The 1.1410 level has provided the barrier for further gains, and that was the pandemic market crash lows.
The inability to clear resistance could mean that the Pound is ready to head lower again.
The day’s inflation figures were forecast to come in at 10% but rose to the 10.1% level, which was the high of the year. This signals to markets that the BOE rate hikes are not slowing inflation just yet. The Bank of England did predict highs of 11%, but they have been wrong for two years on inflation.
With EU sanctions on Russian oil coming soon, there is potential that we will return to the inflationary energy theme of earlier in the year.
That could put pressure on the global economy again and add to the woes of the UK economy. The British government turmoil has also added some weight to the sterling with talk of the new Prime Minster being ousted soon.
GBPUSD may have topped but looks seemingly to go back towards the downside. The 1.1410 level provides a firm stop-loss zone.
