Inflation still overshoots the BOE target
The downtrend continues as the price breaks the 50 DMA
The immediate reaction of the economic data on the Sterling dollar pair was negative and investors pushed the pair lower. It appears that the inflation data is losing steam. The UK home grown prices are still somewhat muted and it is something which the MPC is comfortable about. The inflation data overshooting the bank’s target is blamed on the sterling weakness. Going forward, the growth picture still looks subdued and this does not appear to be changing in 2018 as well. More notably, one can not disregard the influence of higher energy prices from Big six energy suppliers making its way to the CPI basket.
The candle session shows that the downward trend has more room to go.
Price piercing the 50-DMA is a sign of weakness.
As long as the price is above the upward trend line and both: 100 and 200 DMA, the bulls still control the momentum.
The support is at 1.2812 which is the low of 12 July, however, the area where the price could bounce back up is 1.2877.
The resistance is at 1.3270