UK's Lower-than-Expected Inflation Rate May Influence Bank of England's Decision

In August, the United Kingdom experienced a 6.7% inflation rate, which was slightly lower than anticipated and showed a small decline from the previous month. This situation could potentially impact the Bank of England's decision to pause its tightening measures after its upcoming announcement. The likelihood of a quarter-point interest rate increase on Thursday has also decreased, now having a probability of less than 60% in the market, down from the previous 90% as indicated by swap pricing.

Investors widely expect that the central bank will maintain its current interest rates when it announces its latest policy decision on Wednesday. Additionally, the Federal Reserve will release its quarterly update on various economic indicators such as interest rates, gross domestic product, inflation, and unemployment.

Regarding GBP/USD, it continues to experience a selloff today following the release of CPI numbers, which approached the 1.2300 support level and the 61.80% Fibonacci level, with the next potential support at 1.2200. The resistance level is anticipated to be at 1.2450.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.2650	1.2580	1.2450	1.2400	1.2300	1.2200