UK100 holds above 7810 despite UK CPI miss
|UK100, H1
The pound has taken a beating following the UK CPI miss, presently showing a 0.6% decline on the day versus the dollar and an outsized 1.8% loss against the yen, which has outperformed on a safe haven bid amid souring risk appetite in global markets. The pound is fractionally lower against the euro. Cable has clocked a fresh five-month low at 1.3347, while GBPJPY has posted an 11-week low at 146.28. The UK April headline CPI unexpectedly ebbed to 2.4% from 2.5% y/y in March, and the core CPI rate also came in a tad under at 2.1% y/y, down from 2.3% y/y in the month prior. The data can be downplayed to a degree, as the early timing of the Easter holiday relative to last year has caused some distortion, while rising oil prices, if sustained (which looks likely), can also be expected to exert upside influence on inflation rates in the months ahead. It can also seen that concurrent dollar and yen strength have exaggerated the picture of a weakening pound, which has in fact held up much better versus the euro and other currencies.
Stock market sell off continued in Europe. Risk aversion is back in full force and after a weak close in the U.K. and a broad sell off across Asia, European stock markets followed with the GER30 down -1.49% and the UK100 down -0.72%.
UK100 however seems to run out of steam in thou hourly chart, since for 3 consecutive sessions in manage to held above 7800 area which is the support area of the week as well. This level could be seen providing a support of the pair and therefore we could seen UK100 reversing higher. However, on the break below this level, the next support comes at 7790.00 – 7775.00. Resistance hols at 7860.00
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