How to trade the UK CPI with GBP/USD

• UK inflation is closely watched by the BOE and moves the British Pound.
• The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
• The GBPUSD moved, on average, 10 pips in the 15 minutes after the data release and 31 pips in the following 4 hours   

Buying GBP/USD Scenario

• Tradable Positive Trigger: +1.2404 deviation (2.6215%) [BUY Pair]

• Key Resistance Level:  1.2840

This time, if it comes out at higher than expected with a relative deviation of 1.2404 or higher (2.6215 or higher in actual terms), the pair may go up reaching a range of 31  pips in the first 15 minutes and 102 pips in the following 4 hours. 

1.2840 was a stepping stone on the way down which capped the pair after the fall. 1.2920 was another separator of ranges in early August. 1.2980 temporarily held the pair around the same period of time and served as support in July. 

Selling GBP/USD Scenario

• Tradable Negative Trigger: -1.09 deviation (2.48%) [SELL Pair]

• Fundamental Support Level: 1.2725

If it comes out lower than expected at a relative deviation of -1.1058 or less (2.3916 or lower in actual terms), the GBPUSD may go down reaching a range of 43 pips in the first 15 minutes and 95 pips in the following 4 hours.

1.2770 was a pivotal line in the range in mid-August. 1.2725 was the low point in for the pair on August 10th. 1.2650, a level from 2017 is next down the line, followed by 1.2600. 

GBP/USD Levels on the Chart

More data

UK inflation slowed down more than expected in recent months but remains above 2%, the holy grail of central banks and the Bank of England's target. The publication for July will be the first one after the BOE raised rates and we will learn if the hike was justified or not.

Preview: Only inflation in 1-year time from now is important

In the last five releases, the GBPUSD moved, on average, 10 pips in the 15 minutes after the data release and 31 pips in the following 4 hours. The previous release had a negative surprise of -2.04123 in terms of relative deviation and the GBPUSD reached a 12 pip range in the first 15 minutes and a range of 37 pips 4 hours thereafter. 

Follow the publication of the figure on the economic calendar. Watch out for the data from the Market Impact tool, projecting the potential price changes according to the deviation. Here is the Market Impact Studies Users Guide.