Cable rose to new session high at 1.3924 after data showed UK inflation unexpectedly rose in January (3.0% vs 2.9% f/c) remaining close to six-year high at 3.1%.
Near-term sentiment improves further as strong inflation numbers support hawks who advocate for BoE rate hike in May and counting one more hike in 2018.
Strong inflation data in January backed BoE’s hawkish hold last week, keeping positive interest rate outlook.
However, strong expectations that BoE will act in May could be overshadowed by persisting Brexit concerns, as BoE MPC member McCafferty pointed at Brexit in his speech on Monday, saying that central bank’s rate outlook could be tested by Brexit.
Next round of Brexit talks starts on 26 Feb and would provide more clues about monetary policy outlook.
Sterling holds positive near-term tone against the greenback and extends recovery from 1.3764 (three-week low, posted on 09 Feb), which needs close above next pivot at 1.3960 (Fibo 38.2% of 1.4277/1.3764 bear-leg) to generate fresh bullish signal and open way for recovery extension towards 1.40 zone.
Res: 1.3924, 1.3960, 1.4000, 1.4021
Sup: 1.3885, 1.3832, 1.3796, 1.3764
 remaining close to six-year high at 3.1%. Near-term sentiment improves further as strong inflation numbers support hawks who advocate for BoE rate hike in May and counting one more hike in 2018.){kind=link}