British Pound (GBP) Latest: GBP/USD Challenges Peak, EUR/GBP Unlikely to Break Out

• UK Broadly In-line with Estimates, 2% Likely in Summer

• GBP/USD Falters At YTD Peak

• EUR/GBP Remains Rangebound

UK Inflation:Unlike the US, the UK CPI figures were broadly in line with expectations in which the headline figure rose 1.5%, above expectations of 1.4%, while the core figure printed at 1.3%, matching estimates. This is of course is largely explained by base effects and at present is not a cause of concern for the BoE. That said, upside risks remain to inflation as signalled by the PPI figures, in which input prices rose to 9.9% (exp. 9%) and thus CPI can be expected to move above 2% in the coming months. In reaction to the data, GBP was muted, greater focus will likely be on Fridays PMI data.

GBP/USD: As the UK moves closer to normality, the backdrop for the Pound remains supportive, while the technical picture is also encouraging. A slight failure to reach the YTD peak as trendline resistance holds firm, however, cable is in a market that has been taking a “buy the dip” approach, in which the 1.40 handle has been a key pivot. As such, risks remain for a topside break.

GBP/USD Chart: Daily Time Frame

EUR/GBP:The crosshas maintained its well-defined range. Topside resistance at 0.8730 remains firm and tests below 0.8600 have been somewhat short-lived. That said, the continued rangebound price action is likely to persist in the short term, given that the greenback has been the main driver in G10 FX as opposed to idiosyncratic factors. Therefore, the bias would be to fade the range bottom and tops.

EUR/GBP Chart: Daily Time Frame

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