GBP/USD comes off lows after inflation shock

The earlier UK inflation report surprise, which sent the pound immediately lower has dissipated somewhat over the past couple of hours. The FTSE 100 has pared its gains and now dropped back underneath 7,700. Earlier the FTSE rose to a new interim high at 7,762. The GBP/USD has managed to build a base for now at 1.2648 and so far resisted a fall below the most recent low at 1.2629. It has just now managed to grind its way back above 1.2675, as the impact of that surprise fall in UK CPI lessens. The one data point there that really seemed to do the damage was the drop below 4% (3.9%) in the annualised rate of headline consumer prices. At the same time I cannot say that anyone here is feeling the benefit of that most immediately. So, the pound is trying to fight back and it remains to be seen how much further it might recover, before another wave of sellers steps back in. In fact, the GBP/USD has just been knocked back, as I end this update, currently trading at 1.2665