GBP / USD hits one-week highs supported by UK inflation data

• The pound rises in the market on Wednesday before the Fed and the BoE.
• Higher-than-expected UK inflation data strengthened the British currency.
• The mixed dollar, with eyes on the Federal Reserve.

The GBP / USD is rising on Wednesday, ahead of US data and the Fed’s decision, supported by UK inflation figures.. The pair reached as high as 1.3282, the highest in a week before retreating towards 1.3250. It remains bullish in the very short term, but still in a lateral direction considering a more general perspective.

Higher-than-expected inflation in the UK

The UK inflation data for November showed higher than expected figures, which gave the pound a boost and added pressure to the Bank of England (BoE) which will announce its monetary policy decision on Thursday.

The main index rose to 5.1% and the underlying to 4.0% (record since it has been measured since 1992). This inflation data adds to the employment report on Tuesday, which was better than expected, which once again raised expectations of a rise in the benchmark interest rate by the BoE.

Before the BoE it will be the turn of the Federal Reserve, with the decision on Wednesday at 19:00 GMT. The reduction of the purchasing program is expected to intensify. In addition to this, the projections of the FOMC members on the trajectory of interest rates and the signals that Jerome Powell gave at the press conference will be important.

The dollar and financial markets are expected to have hours of high volatility ahead, considering not only the Fed meeting, but also those of the BoE and that of European Central Bank.

For GBP / USD these days could usher in a recovery from a month-long low near 1.3150, or a drop below to fetch 1.3000. A key level in the short term is at 1.3300, where the 20-day average is passing: a close above it would be a positive event for the pound, giving it new support.

Technical levels