How to trade the UK inflation data with GBP/USD

Headline UK inflation is closely watched by the BOE and has a significant impact on the 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 32 pips in the following 4 hours.

Yohay Elam FXStreet

Buying GBP/USD Scenario

Tradable Positive Trigger: +1.24 deviation (2.72%) [BUY Pair]
Key Resistance Level: 1.3295

This time, if it comes out at higher than expected with a relative deviation of 1.24 or higher(2.72 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.

1.3295 capped the pair on July 16th and also earlier. Further above, 1.3365 was a swing high on July 9th. 1.3445 was a peak back in mid-June.

Selling GBP/USD Scenario

Tradable Negative Trigger: -1.09 deviation (2.48%) [SELL Pair]
Fundamental Support Level: 1.3095

If it comes out lower than expected at a relative deviation of -1.09 or less(2.48 or lower in actual terms), the GBPUSD may go down reaching a range of 44 pips in the first 15 minutes and 95 pips in the following 4 hours.

1.3095 was a low point on July 13th and also earlier. 1.3050 was a swing low back on June 29th. The round number of 1.3000 is below.

GBP/USD Levels on the Chart

More data

UK inflation slipped to 2.4% YoY, weighing on the Pound in the last publication. Towards the August decision in which the BOE is projected to raise rates, any changes in price development make a difference in the BOE's decision.

In the last five releases, the GBPUSD moved, on average, 10 pips in the 15 minutes after the data release and 32 pips in the following 4 hours. The previous release had a negative surprise of -0.98 in terms of relative deviation and the GBPUSD reached a 13 pip range in the first 15 minutes and a range of 24 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.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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