Sasha Singh
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GBP/USD: 100 day SMA acting as Support

GBPUSD was earlier following an uptrend which it stopped yesterday and trimmed some of its gains. Yesterday 50 days SMA was acting as a support to the pair which it broke today after the Office for National Statistics released the Consumer Price Index data which is the Inflation measure used in the Government's target for Inflation.

The Rate of Inflation faced by households in January 2014 was 1.9%. The YoY CPI grew by 1.9% in January 2014 down from 2% in December 2013. This is the first time since November 2009 that inflation has fallen below the government’s target of 2%.

 Although price movements in recreational goods & services, furniture & household goods , Alcohol & Tobacco sectors were the main contributors to the slowdown in the rate of inflation it would be better to consider the sectors that contribute to the actual rate in Inflation in understanding Inflation which didn’t change much from month to month but have biggest impact on households. In 24 out of last 27 months, prices in housing, water, electricity and gas & other fuel sector have been the largest contributor to the inflation rate and currently account for a quarter of Inflation.

Fundamentally the pair should not move below 100 Days SMA and should continue to move to multi-year highs.