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Remember when the Bank of England (BOE) said that it would look for signs of “persistent inflationary pressures?”

Well, the U.K. recently printed its latest consumer prices and hoo boy did it surprise to the upside.

Annualized CPI came in at 10.4% y/y in February, higher than the expected 9.9% uptick and the 10.1% reading in January.

Not surprisingly, the stickiness of high inflation in the U.K. got the markets backing down from their “peak rate” bets for the BOE.

GBP/USD: 1-hour

GBP/USD 1-hour Forex Chart

GBP/USD 1-hour Forex Chart by TradingView

Meanwhile, the Fed has shifted its rate hike narrative from anticipating “ongoing rate increases” to “some additional policy firming may be appropriate.”

The Fed also believes that tighter banking credit conditions will “substitute” or do the job of further rate hikes but for now, traders are pricing in a “dovish hike.” That is, they’re dumping the safe-haven USD in favor of riskier bets.

Will the risk-taking push GBP/USD to the 1.2400 levels? As you can see, the psychological area lines up with a range resistance that held in December and again in January.

Cable has 70 pips or so more to go before hitting the resistance zone so y’all still have time to make trading plans!

Momentum traders can take advantage of the current risk-taking environment and ride the upswing all the way to the 1.2400 area.

You can even plan a scaling-in situation in case GBP/USD sees an upside breakout!

Don’t discount a U-turn for GBP/USD’s intraweek prices though.

After all, today’s BOE rate hike could pile on to banking sector worries in the European region.

Meanwhile, the markets could price in that the Fed’s “dovish hike” actually means that the central bank is worried for the economy’s prospects despite a sticky high inflation.

If GBP/USD gets rejected at 1.2400 and/or Stochastic starts turning lower from its “overbought” levels, then Cable could drop back down to the 1.2300 or 1.2200 previous inflection points.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.