Good size offers at 1.8900 kept a lid on cable following half-cent gains spurred by October's way above-forecast UK retail sales. These came in +0.9% m/m, +3.9% y/y. Increases of 0.3% m/m and 3.0% y/y were expected.
The strong numbers are a welcome boost for hawks touting another 25bp UK rate hike in February. Their case had been damaged by Tuesday's sub-forecast UK CPI, and yesterday's less hawkish-than-expected BoE inflation report. 1.8900+ resistance levels include 1.8910 (today's Asian session peak), 1.8925 (Tuesday's low), and 1.8969. As well as being yesterday's pre-UK data high, 1.8969 is also a 38.2% Fibo retracement point of the fall from last Friday's 19-month high of 1.9180 to yesterday's 20-day low of 1.8838.
Yesterday's recovery from 1.8838 was reportedly aided by Central Bank demand. Fresh reserve manager buy interest is tipped at 1.8840. Some stops are touted below 1.8830. These could depress GBP/USD towards 1.8810 if tripped. US October inflation data is due at 13:30GMT. Headline CPI is forecast down 0.3% m/m. Core CPI is forecast +0.2% m/m.
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