The GBP/USD pair plunged after increasing as much as 1.3269 today. It has failed to reach the 1.33 psychological level as the Dollar Index rallied in the short term. As you already know, the UK released its inflation data today.
The British Pound crashed after the UK reported higher inflation. The CPI rose by 6.2% more compared to 6.0% expected, while the Core CPI registered a 5.2% growth exceeding the 5.0% estimates. Higher inflation is not good for the Pound or for the UK economy. Still, the inflationary pressure will force the BOE to continue to hike rates even if one member voted to keep the rate unchanged in the March meeting.
GBP/USD Demand Zone!
Technically, GBP/USD found support at the 1.3194 key level. 1.3194 - 1.3160 represented a strong resistance zone which turned into a support area. After its amazing sell-off, the pair could try to come back to test and retest the ascending pitchfork's upper median line (uml) which stands as the immediate resistance level.
Technically, the swing higher started from around 1.3000 psychological level could be only a temporary one. Failing to make a new higher high, to jump above 1.3298 today's high may signal that the leg higher is over.
GBP/USD Outlook!
The GBP/USD pair stands within an up-channel pattern. It could try to come back higher as long as it stays above the 1.3194 - 1.3160 and above the uptrend line. A temporary growth could bring new short opportunities.
Dropping below the uptrend line, making a valid breakdown from the up-channel pattern may announce a larger drop, a new leg down.
