GBP/USD sees an upside above 1.2250 ahead of UK Inflation data

• GBP/USD is expecting more upside above 1.2250 amid a cheerful market mood.
• BOE’s Mann doesn’t see any risk of over-tightening in its current interest rate hike cycle.
• The US PPI is expected to decline further amid lower gasoline prices and weak retail demand.

The GBP/USD pair is struggling to extend gains above the immediate resistance of 1.2250 in the early Asian session. The Cable has sensed selling pressure while overstepping the aforementioned resistance a few times but is now expected to extend the rally upside amid a significant improvement in the risk appetite of the market participants.

A four-day winning streak in S&P500 is portraying that the market mood is quite upbeat. Investors are pouring funds into the risk-perceived assets while dumping the safe-haven assets. The 10-year US Treasury yields surprisingly gained to 3.50%. Meanwhile, the US Dollar Index (DXY) managed to restrict its downside to near 101.76.

This week, the Pound Sterling will be guided by the United Kingdom inflation data, which will release on Wednesday. As per the projections, the headline Consumer Price Index (CPI) (Dec) is expected to trim to 10.6% from the former release of 10.7%. While the core price index data that excludes oil and gas prices might escalate to 6.6% vs. the prior release of 6.3% in a similar period.

It looks like the UK inflation has got more stubborn and the Bank of England (BOE) will be forced to continue hiking interest rates further. BOE member Catherine Mann cited that the central bank is not at a point where it needs to worry about the risk of over-tightening in its interest rate-rising cycle.

On the United States front, investors are awaiting the release of the Producer Price Index (PPI) data. The street sees a decline in headline factory gate prices of goods and services (Dec) to 6.8% from the former release of 7.4%. Also, the core PPI might trim to 5.9% from the former release of 6.2% in a similar period.