• GBP/USD experienced volatile trade on Wednesday after softer-than-expected UK inflation data reinforced expectations that the Bank of England may take a more cautious approach toward further policy tightening.
• The pair initially fell to 1.3377 immediately after the release, marking a marginal new two-day low, before rebounding sharply to an intraday peak near 1.3434 as traders reassessed the implications of the inflation report..
• UK consumer inflation slowed more than expected in April, with headline CPI rising 2.8% year-on-year compared with forecasts for a 3.0% increase..
• The softer reading strengthened the position of policymakers arguing against another Bank of England rate hike in June, as easing price pressures may reduce the urgency for tighter monetary policy.
• Markets were also monitoring political developments, with UK Prime Minister’s Questions attracting added focus following disappointing local election results for the Labour government, which have raised questions about the domestic political outlook. .
• Immediate resistance is located at 1.3496 (50%fib)), any close above will push the pair towards 1.3511(SMA 20)
• Strong support is seen at 1.3353 (38.2%fib) and break below could take the pair towards 1.3302(Daily low).
Recommendation: Good to sell around 1.3440, with stop loss of 1.3500 and target price of 1.3330
