GBP/USD Plunges as UK Inflation Hits Five-Month High

The British Pound (GBP) has come under heavy pressure in recent weeks following last month's rejection from major resistance. The decline has accelerated through September, bringing the GBP/USD currency pair to an important inflection point where bears need further confirmation to sustain the decline.

Attention is shifting towards incoming growth data for clues on whether the current weakness has further to run. The Bank of England maintained its main interest rate at 3.75% despite higher inflation, which rose to a five-month high in August. UK CPI inflation increased to 3.1%, and it's likely to rise further over coming quarters.

The MPC voted by a majority of 6-3 to maintain Bank Rate at 3.75%. Three members voted to increase Bank Rate by 0.25 percentage points, to 4%. The policy stance required to achieve the inflation target will depend on the scale and duration of the energy shock.