How to trade the UK inflation report with GBP/USD

UK inflation is central to the Bank of England and is set to have a big impact on the Pound.
The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
The GBP/USD moved, on average, 39 pips in the 15 minutes after the data release and 96 pips in the following 4 hours

Yohay Elam FXStreet

Buying GBP/USD Scenario

Tradable Positive Trigger: +1.66 deviation (2.65%) [BUY Pair]
Key Resistance Level: 1.3615

1.3495 capped the pair on May 22nd and the area served as a support line earlier in the month. Further up, 1.3615 worked as resistance in May. Further up, 1.3710 was a swing low in early March.

If it comes out at higher than expected with a relative deviation of +1.66 or higher (2.65% or higher in actual terms), the pair may go up reaching a range of 38 pips in the first 15 minutes and 82 pips in the following 4 hours.

Selling GBP/USD Scenario

Tradable Negative Trigger: -2.47 deviation (2.28%) [SELL Pair]
Fundamental Support Level: 1.3393

If it comes out lower than expected at a relative deviation of -2.47 or less (2.28% or lower in actual terms), the GBP/USD may go down reaching a range of 40 pips in the first 15 minutes and 77 pips in the following 4 hours.

1.3393 was the low seen on May 21st, a new 2018 low. Further down, 1.3350 served in both directions in late 2017. The round 1.33 level in early December 2017.

GBP/USD Levels on the Chart

More data

The fall of annual inflation to 2.5% in March was one of the events that weighed heavily on the Pound as it lowers the chance of a rate hike. A repeat of the same level is expected for April and any deviation is likely to shake the pair.

See the full preview: BOE cheers inflation approaching the target with wages replacing Sterling as the key driver

In the last five releases, the GBP/USD moved, on average, 39 pips in the 15 minutes after the data release and 96 pips in the following 4 hours.

The previous release had a negative surprise of -2.24 in terms of relative deviation and the GBP/USD reached a 94 pip range in the first 15 minutes and a range of 122 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.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.