GBP/USD: Erosion of the 1.3910/30 hurdle is crucial to see another leg higher – SocGen

GBP/USD showed no immediate reaction to September inflation figures and continues to move sideways around 1.3800. The cable needs to surpass the 1.3910/30 region to extend its advance, economists at  Société Générale report.

BoE hawks won’t drop call for higher rates after softer CPI

“A downtick in UK inflation to 3.1% in September from 3.2% in August is not the end of the upswing in prices and will therefore not deter sterling money markets from nailing down hawkish rate expectations for the BoE. The core rate slowed to 2.9% from 3.1%.”

“The GBP/USD pair is approaching potential hurdle of 1.3910/1.3930 representing the recent peak and the 61.8% retracement from June. Overcoming this resistance zone would be crucial for the next leg of rebound.”

Failure to reclaim the 1.3910/1.3930 zone can lead to a short-term pullback. 1.3670 and last week's trough of 1.3570 are near term supports.”