There was a sharp rise in gbp/usd when UK CPI data was released. I somehow missed the event, probably due to being absent minded when I was looking through at key fundamental events for this week. Having broken yesterday’s low Pound reversed and was rising since 07:34 GMT. There was no knee jerk reaction as it usually happens when news is released. Pound rose steadily for 1 hour and then rallied on positive CPI news.
What does that mean? Well, expectations for rate hike from BOE are renewed and 1.5700 level will probably be under fire sooner rather than later and this time it may actually give in. If we see dovish tone in FED minutes on Wednesday and worse than expected US CPI the same day, the above mentioned level will probably be broken and price will head towards 1.6000.
In that case we would be looking for going long in British Pound and shorting US dollar. Asian session lows and highs will be key points in selecting the best trades. For the time being, let’s wait for happens with 1.5700, because it is under attack at the time of writing.