After a move lower in the past hour to test the 200-hour MA (blue line) once again, the pound is finding some relief from UK inflation data as the release reaffirmed the BOE's conviction to keep rates unchanged in the January policy meeting.
In turn, price is now reverting higher to test the 100-hour MA (red line) @ 1.3023 as buyers are looking to try and break the neutral near-term bias currently.
Despite the beat in inflation, it doesn't change much in my view. Core inflation still remains under the 2% level and unless we see price pressures trend higher in the coming months, the BOE will still be at risk of falling into the low inflation trap.
As such, they will likely tread with caution but at least for now, their actions are vindicated.
Given that situation, this should just reaffirm the status quo in the pound right now and the focus should turn towards domestic economic conditions to start the year.
They don't come any bigger than January retail sales data tomorrow as well as February flash PMI readings on Friday.
I would expect pound gains to be limited once again with the trendline resistance seen at 1.3036 as well as the resistance region around 1.3050-70 likely to stop any major breakout in near-term price action above the 100-hour MA.