Pound jumps to 1-week high as BoE's Mark Carney says rate hike time is closer

The UK pound made a sharp jump on Tuesday as the Bank of England governor Mark Carney said the time of a rate hike is nearing.

Carney was speaking at the inflation hearing in front of the UK Treasury. GBP/USD rallied to 1.5604, its highest since 7 July, from near 1.5480 following the remarks.

According to the central bank, it will be consistent growth above trend and firming in domestic costs, counter-balanced by disinflation imported from abroad will add to the hiking of rates.

The Bank Rate, BoE's main interest rate, has been held at 0.5% since 2009.

The pair had been weak ahead of the event as consumer price inflation data came in with a negative surprise.

Year-on-year, the CPI rate dropped to 0% in June from 0.1% in May. The month-on-month rate also eased to 0% from 0.2% while analysts had been expecting it to move to 0.1%.

The core CPI rate eased to 0.8% from 0.9%. The BoE's inflation target is 2%.

Meanwhile, Greek uncertainty continued to weigh on currency markets with the political challenges ahead for the new bailout deal.

Sterling had fallen to a one-month low of 1.5330 on 8 July, but has since been on an upward trend. At the high so far, the UK currency has strengthened nearly 1.8% from the recent low.

Technically, the uptrend since early May is intact as the bounce this week is in fact a move off the channel support. On the way up, 1.5600 is a crucial resistance, which meets the 50-period moving average on the weekly chart.

A break above that will make the journey towards 1.5930, the seven-month high hit last month, easier and then opening doors to 1.6000, which is likely to make the channel resistance.

In case of a retreat, the pair will have its first stop at 1.5330 and then 1.5170, ahead of 1.4950 and then the mid-April multi-year low of 1.4565.