GBP/USD is trading close to 1.3420 heading into Wednesday, holding onto most of the week's gains after a sharp round-trip from about 1.3250 on Monday's ceasefire-driven sell-off to near 1.3480 on Tuesday. The pair has stabilized well above the 1.3360 area, with Tuesday's late session fading slightly from the weekly highs in a narrow range.
Wednesday's February Consumer Price Index (CPI) release at 07:00 GMT is the key event for the midweek market session. January's reading came in at 3.0% YoY, down from 3.4% in December, with core CPI at 3.1% and services inflation at 4.4%. The consensus for February's core CPI is 3.1% YoY, holding steady. The Bank of England's (BoE) March meeting minutes noted that services inflation at 4.4% was well above the bank's 4.1% forecast and warned that the Middle East energy shock would push headline CPI to between 3% and 3.5% over the next few quarters. Governor Andrew Bailey described the situation as one where "monetary policy cannot reverse this shock to supply" but "must respond to the risk of a more persistent effect on UK CPI inflation."
The March decision was unanimous to hold, a notable shift from February's tight 5-4 split where four members had wanted to cut to 3.50%. Market-implied rates now slope slightly upward through 2026, with earlier expectations for near-term cuts all but abandoned. A hot CPI print on Wednesday, particularly in core and services, would reinforce the BoE's hawkish hold and support Pound Sterling, while a softer reading could revive some cut expectations ahead of the April 30 meeting.
Later in the week, BoE Deputy Governor Sarah Breeden and external member Megan Greene both speak on Thursday, followed by Friday's retail sales data (MoM consensus -0.8% vs 1.8% prior) and GfK consumer confidence (consensus -24 vs -19 prior), which will test how quickly the energy shock is weighing on household spending.
GBP/USD hourly chart
Technical Analysis
In the 1-hour chart, GBP/USD trades at 1.3419. The near-term bias is mildly bullish as price holds above the rising 200-period exponential moving average near 1.3360, keeping the broader hourly trend pointed higher despite recent sideways action. The latest Stochastic RSI uptick from depressed levels shows recovering momentum after an oversold condition, aligning with the pair’s ability to defend higher lows above the long-term average.
Initial support aligns at 1.3400, guarding a deeper pullback toward 1.3380 and then the 1.3360 area, where the 200-period EMA adds technical backing. On the topside, immediate resistance emerges at 1.3450, with a break exposing 1.3480 and then the 1.3520 region. As long as GBP/USD holds above 1.3380, buyers retain control of the intraday structure, while a sustained drop through 1.3360 would undermine the current bullish bias.
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