Forex: GBP/USD drops from 1.5900 post inflation report

FXstreet.com (Barcelona) - GBPUSD is currently trading at 1.5865 having sharply declined from resistance at 1.5900 following the BoE's Quarterly Inflation report and subsequent speech by Governor King.

In his speech, King said that the UK is facing the prospect of higher inflation and slower growth and the economy will continue to slow without a weakening of the pound whilst the MPC is open to further asset purchases. He added that the current inflation situation explains the pause in MPC bond purchases and that the group has not made a decision to not use QE as the main monetary instrument. This has weighed on Cable and spot has declined to post a new low since early September. Spot is currently trading at 1.5860, with S1 support sitting just below at 1.5850.

With the European calendar complete for the day, focus now shifts to the US session where PPI and Retail Sales are due at 13:30 GMT before the FOMC minutes are published at 19:00 GMT. Elsewhere, European stocks are down, US futures however are higher alongside commodities and critical yields are down.