• GBP/USD climbs higher on higher UK CPI.
• The soaring Uk’s inflation has raised the expectation of one more interest rate hike by the BOE in May.
• Risk on market sentiment has dampened the safe-haven appeal.

The Pound edged higher during Thursday trading session. The higher-than-expected declaration of the UK’s inflation boosted the pound. As per the UK’s Office for National Statistics report, the UK’s Consumer Price Index (CPI) arrived at 7%, much more than the forecasts of 6.6%. Meanwhile, the Core CPI landed at 5.7%, elevated from the estimates of 5.1%.

The yearly UK Retail Price Index has landed at 9%, higher than the previous figure and market consensus of 8.8% and 8.2% respectively.

Meanwhile, The higher CPI shows the UK is facing price pressures amid higher energy bills and food prices after Russia’s invasion of Ukraine. This figure is expected to elevate further on the prohibition of Russian oil and this has raised the hope of a fourth-rate hike by the Bank of England (BOE).

Earlier, the BOE raised its interest rates to 0.75%. The BOE hiked its borrowing rate by 25 basis points (bps) twice in February and March and by 10 bps in December. In March’s monetary policy, BOE Governor Andrew Bailey announced that inflation is set to reach 8% in the month of April and the Ukraine crisis due to Russia’s invasion of Ukraine, which is bolstering the energy bills of households. Also, the higher commodity prices have dented the margins of corporate.

Further, Risk on market sentiment despite continuing fighting between Ukraine and Russia also favors the pound, the US dollar index (DXY) is eyeing more downside on improvement in the risk appetite of investors.

GBP/USD 4 Hour Chart:

Support: 1.3019 (S1), 1.2923 (S2), 1.2874 (S3).

Resistance: 1.3164 (R1), 1.3214 (R2), 1.3310 (R3).

Moving on, investors will focus on Thursday’s Michigan Consumer Sentiment Index (CSI) to direct their move further. In the meantime we expect a bullish trend for GBP/USD.