GBP/USD pauses around 1.3140 after a sheer upside, focus shift on Michigan CSI

• GBP/USD sees more upside amid elevated expectations of one more rate hike by the BOE.
• Positive market sentiment has dampened the safe-haven appeal.
• Investors will focus on the US Retail Sales and Michigan CSI on Thursday.

The GBP/USD pair is oscillating in a narrow range of 1.3129-1.3145 after a juggernaut rally from Wednesday’s low at 1.2981. A minor consolidation after a vertical firmer upside move is indicating a ground formation for further rally.

The cable has been surging higher on a higher-than-expected declaration of the UK’s inflation on Wednesday. The UK’s Office for National Statistics reported the UK’s Consumer Price Index (CPI) at 7%, much more than the forecasts of 6.7%. While the Core CPI landed at 5.7%, elevated from the estimates of 5.4%.

 A higher UK Core CPI has cleared that the households in the pound region are facing price pressures amid higher energy bills and food prices after Russia’s invasion of Ukraine. The figure is expected to elevate further on the prohibition of Russian oil. This has advanced the chances of a fourth-rate hike by the Bank of England (BOE). Along with the soaring inflation, the tight labor market in the UK will also strengthen the odds of one more rate hike by the BOE in May.

Meanwhile, the US dollar index (DXY) is eyeing more downside on improvement in the risk appetite of investors. The DXY has plunged to near 99.60, easing almost 1% from its recent high of 100.52 on Wednesday.

Going forward, investors will focus on Thursday’s Michigan Consumer Sentiment Index (CSI). The University of Michigan is expected to print the CSI at 59, lower than the prior print of 59. Apart from the Michigan CSI, investors will also keep an eye on the monthly US Retail Sales, which are seen at 0.6%.