• GBP/USD edged lower on Wednesday as the pound gave back gains investors digested sticky UK inflation data for December.
• UK inflation rose more than expected in December, driven by higher airfares and tobacco prices, though price growth is still expected to ease sharply in the months ahead.
• Official UK data showed the headline rate of inflation accelerated to 3.4% in December, compared to forecast of 3.3% while services inflation also sped up to 4.5% from 4.4% in November..
• Investors kept expectations unchanged for Bank of England rate cuts later this year, as closely watched services inflation rose in line with forecasts.
• Immediate resistance is located at 1.3459(50%fib), any close above will push the pair towards 1.3573(38.2%fib)
• Strong support is seen at 1.3352(61.8% fib) and break below could take the pair towards 1.3327(Lower BB).
Recommendation: Good to buy around 1.3410 with stop loss of 1.3350 and target price of 1.3490
