GBP/USD holds steady near 1.3100 after UK inflation beats expectations

GBP/USD maintained stability around 1.3100 following hotter-than-expected UK inflation data that reinforced expectations for Bank of England policy tightening. UK CPI rose more than forecast, suggesting persistent price pressures that could prompt the BoE to maintain its hawkish stance longer than previously anticipated. The pound initially spiked 0.4% on the inflation release before consolidating gains as traders digested the implications for UK monetary policy. Against the yen, GBP/JPY advanced to test resistance near 198.50, benefiting from the inflation surprise and risk-on sentiment. Technical analysis shows GBP/USD facing immediate resistance at 1.3150, with support established at 1.3050. The inflation data strengthens the case for further BoE rate hikes, potentially widening the UK-US yield differential in sterling's favor. Traders should watch for any BoE commentary on the inflation outlook and prepare for potential volatility around upcoming UK economic releases.