UK inflation hit its highest since October 1981 and that saw a brief spike in cable to 1.1901 before settling a bit lower thereafter. The retreat in the dollar amid some improvement in the risk mood is also helping to keep the pair underpinned as the technical picture continues to side with buyers for now:
The surge higher following a softer US PPI report yesterday saw price clip 1.2000 for a moment before falling back as geopolitical headlines took over.
Now that the latter is starting to fade into the background, traders can start to focus more on the technicals and broader market sentiment in general.
The latest UK inflation figures today aren't so much a game changer but it will continue to reaffirm a darkening outlook for UK households and consumers as the cost-of-living crisis worsens. The BOE has already dialed back on their hawkishness and will be put to the sword once again in perhaps needing to do more in order to tame inflation pressures.
But for the time being, it is all about dollar sentiment and that will make the US retail sales data later today a key risk event to watch.
Key resistance in GBP/USD lies around 1.2000 before looking towards the 200-day moving average (blue line) at 1.2237 next. As for downside momentum, it will really require sellers to take a run back towards the 100-day moving average (red line) at 1.1647 to convince of a potential turnaround in the latest bounce higher.
