GBP/USD catching a bid and market off-guard - FXStreet

Valeria Bednarik, chief analyst at FXStreet explained that the GBP/USD pair edged sharply higher, trimming most of last week's losses this Tuesday, having recovered the 1.3000 level on broad dollar's weakness, and positive data coming from the UK.

Key Quotes:

"During London trading hours, inflation surprised positively, as the CPI rose by 0.6% in the year to July 2016, compared with a 0.5% rise in the year to June. 

Compared to the previous month, inflation decreased by 0.1% as expected. In the same month, the PPI rose yearly basis, with factory gates´ prices up by 0.3% and input prices up by 4.3%.

Given that the BOE has extended its economic stimulus programs, rising inflation during the upcoming months should not be a surprise. Poor inflation figures in the US, on the other hand, fueled the rally, temporarily interrupted on a first attempt to break above the 1.3000 level."

"Anyway, the Pound managed to advance in US trading hours, holding near its daily highs set in the 1.3040 region by the end of the day.

Technically, the pair seems poised to extend its gains, as in the 4 hours chart, the price is well above a now flat 20 SMA, while the technical indicators present sharp upward slopes well into positive territory. Above 1.3045, the rally could extend up to the 1.3100 region, where the next line of sellers awaits to add to the dominant trend."