GBP - BoE 25bp rate hike fully priced in for Thursday

Bank of England's 25 basis point hike on Thursday 

Sterling was steady against the dollar after data on Wednesday showed that UK inflation in February far exceeded expectations.  In addition, the uncertainty at the Bank of England's interest rate meeting on Thursday. Interest rate futures point to a 100% chance that the U.K. benchmark rate will rise to at least 4.25% from the current 4.0%. That probability has risen sharply from Tuesday, when markets priced in a near-50% chance the BoE would pause rate hikes. The U.K. consumer price index (CPI) unexpectedly rose to 10.4% in February from a year earlier, driven by rising food and drink prices in bars and restaurants. The market had expected a 9.9% rise. The year-on-year increase in core CPI excluding items such as energy, food, alcohol and tobacco rose from 5.8% in January to 6.2% in February, and the market expected 5.7%; core CPI is closely watched data by the Bank of England.

Sterling has risen 2 percent against the dollar since March, largely reversing most of February's losses, but with the Bank of England's interest rate decision this week widely seen as likely to be its last rate hike, it could keep the Sterling's extended gains were limited. In terms of technical trends, 1.2450 is regarded as a key resistance right now. It fell back after the three-day challenge failed in mid-December last year, and then hit again in late January this year. The high of 1.2447 on January 23, but about two weeks later The high volatility of the market is still repeatedly restrained in this area. Therefore, it will be an important reference for resistance to explore this area again now. However, if it fails to challenge again, it is expected to repeat the range of more than three months. If there is a downward trend, there is a chance to retest the key support of 1.18; and the closest support is estimated at the 50-day moving average of 1.2140 and 1.20. However, if the pound can finally break through 1.2450 this time, and even break through the buffer resistance of 1.25 in the next city, it is expected to confirm that it has broken through the double-bottom technical pattern. The closer to the target, we will firstly look at the 1.2670 and 1.28 levels.

This week's news:
UK house prices rise 6.3% in January, up 9.3% in December
UK February CPI rose 1.1% month-on-month and 10.4% year-on-year
The UK's core CPI excluding energy, food, tobacco and alcohol in February rose 1.2% from the previous month and 6.2% from the same period last year
UK retail price index (RPI) rose 1.2% month-on-month in February and 13.8% year-on-year

The retail price index (RPIX) excluding mortgage loans in the UK rose 1.1% in February from the previous month and 12.9% from a year earlier

Thursday: Bank of England rate decision (20:00)
Friday: UK Retail Sales for February (15:00)

Estimated volatility:
Resistance 1.2450** - 1.2500 – 1.2670 – 1.2800
Support 1.2140 - 1.2000 – 1.1800*





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