The pound may advance to a level last reached in October 2008 against the dollar if it closes above $1.6380, according to Citigroup Inc.
That rate, reached today, is a 74 percent retracement of sterling’s drop from August 2009 to May 2010, Citigroup technical analysts led by Tom Fitzpatrick in New York wrote in a research note to clients. If the currency closes above $1.6380, it may rise to $1.7050, which would be a 2 1/2-year high, according to Citigroup.
“It’s not going to be that easy to go through, but if we do, that would open up the way for an extension to higher levels,” Fitzpatrick said in a phone interview. “Today it was the extra little push out of the inflation numbers.”
The pound rose for a fourth day in the longest stretch of advances since January after a government report showed U.K. inflation accelerated to the fastest pace in more than two years, adding pressure on the Bank of England to increase its benchmark interest rate.
Sterling appreciated 0.4 percent to $1.6379 at 10:40 a.m. in New York, from $1.6311 yesterday. It touched $1.6401, the highest level since Jan. 19, 2010.
Consumer prices rose 4.4 percent in February from a year earlier after a 4 percent increase in January, the Office for National Statistics said today in London. That’s the highest level since October 2008.
The BOE will raise its benchmark interest rate from a record low 0.50 percent by a quarter-percentage point in the second quarter, according to the median forecast of 17 economists in a Bloomberg News survey.
Technical analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.