just now
Will Inflation Be the Spark that Shatters the 1.3600 Resistance for GBP/USD?
GBPUSD Yesterday price opened at 1.35295 closed at 1.35074. The inflation posted the actual forecast at 3.3%.
UK inflation is expected to jump to 3.3% in March due to a sharp spike price in petrol and diesel fueled by Middle East conflict. The Bank of England initially predicted inflation would fall below 2% this spring, analysts now warn that energy volatility and shipping disruptions could push the rate toward 4% later this year. According to Oxford Economics, these rising fuel costs alone are estimated to have added up to 0.3 percentage points to the monthly inflation figure.
What is the primary driver for the pair?
Basket of Goods used to calculate inflation. In 2026, the primary drivers are
- Transport
- Recreation and Culture
- Housing & Utilities
- Restaurants & Hotels and Food
- Inflation was higher in last year around 3.8%.
Over Forecast if Inflation is higher than expected the probability: 100% (9 out of 9 times may result: The GBP/USD exchange rate rose every time inflation beat expectations.
Under Forecast if the Inflation is lower than expected, with Probability: 85.71% (6 out of 7 times).
As a result, the pair declined when inflation came in lower than expected.
For the actual forecast, if the Inflation meets expectations with probability at 50/50 may result as the market reaction is a toss-up, with the lowest average movement (0.1110%).
UK Inflation forecast at 3.3% from previous 3%
IMPACT- The actual inflation number released today is if supposedly higher than 3.3%, historical patterns suggest a very high likelihood of the British Pound strengthening against the US Dollar immediately. Conversely, a miss (below 3.3%) has historically led to a drop in the exchange rate as investors adjust for a more dovish Bank of England.
UK Inflation & Wages
Investors are eyeing on today's inflation report with a release of the actual forecast 3.3% because of rising energy costs. While prices are up, worker pay raises have slowed down. This gives the Bank of England an excuse to stop raising interest rates for now, though they are still worried about the high cost of local services.
US Economic Strength
The USD remain strong with the retail sales increased by 1.7% higher than expected. Because the economy and job market look so healthy, it’s likely the Federal Reserve will keep interest rates high for a longer period.
Geopolitical as external driver
Tensions involving Iran remain a major uncertainty for the markets. If the situation gets worse and energy prices spike, investors usually flock to the US Dollar as a safe investment. This would put more pressure on the UK economy, which is hit harder by high energy costs.
What trend do we expect from the pair?
Spot Price: Currently around 1.3519.
Resistance Levels
- 1.3600 near the 61.8% Fibonacci retracement, a level which may signal bullish
- 1.3716 78.6% Fibonacci level
Support Levels
- 1.3512 near the 50% retracement level
- 1.3415 to 1.3430 support zone and near the 38.2% Fibonacci level.
Momentum
Relative Strength Index is currently neutral around 48 to 50, indicating a lack of strong directional conviction ahead of the news.
Conclusion & The ACY Edge
The GBP/USD is currently at a crossroads. While the technical structure has strengthened following the breakout from the descending channel in March, the pair is facing significant overhead supply that is preventing a clean break above the 1.3600 psychological barrier.
The GBP/USD is cautious with resistance at 1.3600 as the level is likely to hold as a ceiling. Any sudden spike in inflation could drive a technical breakout directing to 1.3716, the pair is countered by a strong US dollar and a neutral Relative Strength Index that suggests a lack of immediate directional conviction.
The pair is expected to remain range-bound above 1.3512 as markets weigh the Bank of England's cautious stance against persistent geopolitical risks in the Middle East
Disclaimer: This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.
