Key points:
- Sterling pops in third straight session.
- UK shop prices move lower to 0.6%.
- Double top lurks in near distance.
After taking out a double top at $1.27, sterling faces another one in the near distance. Will bears defend their grounds this time around?
- The
GBPUSD pair jumped early Tuesday, on pace to wrap up the third straight day of gains. The sterling was confident in its march to higher grounds as bulls were eyeing the milestone $1.28 mark. The level will form a double top with a March 20 peak of $1.28 and that will test bears’ determination to try and reverse the trend. Last week, the pound-dollar broke out of a double top at $1.27. - By the looks of it, the British currency has been doing a good job in phasing out bearish pressure. Over the past five weeks, it’s gained nearly 4%, or roughly 500 pips, against the weaker dollar and is approaching a 10-month-high resistance at $1.29. That is, if the buyers’ camp is successful in its effort to overtake the immediate double top formation. Some help arrived from the UK economy this morning.
- UK shop inflation fell further in May, moving to 0.6% from 0.8% in April, hitting the lowest level since November 2021. Falling prices for goods across the board like food, furniture, sports goods and garden tools helped bring the rate lower for the 13th straight month. For reference, store prices had ballooned to 9% in May last year. The cool figure provided some relief to UK households, strained from many months of elevated inflation.
