Fxstreet.com (Barcelona) - The release of UK inflation figures helped to support the British pound throughout much of the day on Tuesday, as the data showed that price pressures unexpectedly increased in February.
Indeed, the UK's consumer price index (CPI) surged 0.9 percent during the month, marking the first increase in six months. Even worse, the annual rate of growth accelerated for the first time in five months to 3.2 percent from 3.0 percent, leaving CPI above the central bank's inflation target range of 1 percent - 3 percent.
These indications of persistent price pressures suggest that the Bank of England may be forced to raise the Bank Rate from its record low of 0.50 percent before year end, and for what it's worth Credit Suisse overnight index swaps are close to pricing in 50 basis points worth of rate hikes over the next 12 months.
Going forward, risk trends are likely to continue serving as the primary driver of GBP/USD price action, but the pair's break above the 100 SMA ultimately suggests that further upside potential remains, said said Terri Belkas, an analyst at FXCM.