FxWirePro: GBP/USD rebounds as markets assess Mann’s inflation warning

• GBP/USD bounced  on Tuesday as investors digested Bank of England policymaker Catherine Mann comments

• Bank of England policymaker Catherine Mann warned on Tuesday that inflation running above the central bank’s 2% target appears to have become embedded in the UK economy.

• Mann said last week that the Bank of England made a policy error in March, shortly after the start of the Iran war, by allowing investors to believe it was comfortable taking a wait-and-see approach on interest-rate increases..

• Mann said she was particularly concerned that inflation could reach around 4% near the turn of the year, coinciding with the key period when employers typically negotiate annual wage increases. She warned that higher inflation could reinforce wage pressures and make price growth more persistent.

• The Bank of England has kept interest rates steady since the outbreak of the Iran war, unlike the European Central Bank and US Federal Reserve. Financial markets, however, are now anticipating a rate change at the BoE’s November meeting.

•   Immediate resistance is located at 1.3297(38.2%fib), any close above will push the pair towards 1.3343(Higher BB)

•  Strong support is seen at 1.3165(23.6%fib) and break below could take the pair towards 1.3108(Lower BB).

  Recommendation: Good to sell around 1.3300, with stop loss of 1.3360 and target price of 1.3220