Sterling Stabilizes as Markets Shift Focus to UK Inflation Data

GBP/USD staged a strong rebound after easing fears around UK politics, and improving market sentiment helped support sterling. Comments from UK officials supporting fiscal discipline, along with an upgraded UK growth forecast from the IMF, reduced some of the pressure that had recently weighed on the pound.

At the same time, markets are increasingly focusing on Bank of England policy expectations, with traders now pricing in at least two more rate hikes this year. Upcoming UK wage and inflation data will be important for determining whether the BOE may need to remain more aggressive against persistent inflation pressures.

Technically, GBP/USD formed a bullish key reversal pattern after rebounding sharply from recent lows. The pair is now testing important resistance near 1.3450 and the 50 & 200-day moving average zone. A breakout above this area could open the door toward 1.3500 and 1.3600 area, while failure to hold current gains could bring downside pressure back toward 1.3300.

Overall, sterling’s recent selloff may be losing momentum for now, but upcoming UK data and broader market sentiment will remain key drivers for the next move.

GBP/USD Daily Chart