- CPI declines 0.8% in the UK in January.
- Annual-core CPI in the US stays unchanged at 2.2%.
- US Dollar Index recovers above 97 on Wednesday.
The GBP/USD pair came under pressure in the European session after the data published by the UK's Office for National Statistics showed a more severe slowdown than expected in inflation. Although the pair spiked higher on the back of Brexit headlines and turned positive on the day, the broad USD strength in the second half of the day forced the pair to turn south once again. As of writing, the pair was down 0.32% on the day at 1.2855.
The ONS today reported that the CPI on a monthly basis in January contracted by 0.8% following December's 0.2% increase. Further details of the report revealed that the annual PPI (output) dropped to 2.1% to miss the market expectation of 2.2% and the Retail Price Index (RPI) edged down to 2.5%. After weakening against its rivals following the disappointing data, the British pound gathered strength and lifted the GBP/USD pair to a daily high of 1.2958.
Commenting on the data, "From the monetary policy point of view, the inflation dropped below the targeted 2% annual rise in January and therefore remains off the radar. For the Monetary Policy Committee (MPC) at the Bank of England though, what matters more is the inflation outlook and the inflation expectations going beyond 2019. In this perspective, strong UK wage growth is of greater importance as it remains fundamentally the most upwards pressing force in the UK economy. This has also been the point the Bank of England made in its February release of the Inflation report," said FXStreet European Chief Analyst Mario Blascak said.
Reports of the EU expecting an official request for an extension on Article 50 revived hopes of the Brexit getting delayed rather than the UK crashing out of the EU. Nevertheless, the positive impact on the currency faded out in the NA session as the USD grabbed markets' attention with the 10-year Treasury Bond yield adding more than 1% for the third straight day on Wednesday. The US Dollar Index, which finished the previous day 0.4% lower, was last up 0.4% on the day at 97.08.
Key technical levels
GBP/USD
Overview:
Today Last Price: 1.2855
Today Daily change %: -0.32%
Today Daily Open: 1.2896
Trends:
Daily SMA20: 1.3002
Daily SMA50: 1.2819
Daily SMA100: 1.2885
Daily SMA200: 1.3017
Levels:
Previous Daily High: 1.291
Previous Daily Low: 1.2833
Previous Weekly High: 1.3103
Previous Weekly Low: 1.2854
Previous Monthly High: 1.3214
Previous Monthly Low: 1.2438
Daily Fibonacci 38.2%: 1.288
Daily Fibonacci 61.8%: 1.2862
Daily Pivot Point S1: 1.2849
Daily Pivot Point S2: 1.2802
Daily Pivot Point S3: 1.2771
Daily Pivot Point R1: 1.2926
Daily Pivot Point R2: 1.2957
Daily Pivot Point R3: 1.3003
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD stays weak near 1.2400 after UK Retail Sales data
GBP/USD stays vulnerable near 1.2400 early Friday, sitting at five-month troughs. The UK Retail Sales data came in mixed and added to the weakness in the pair. Risk-aversion on the Middle East escalation keeps the pair on the back foot.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Israel vs. Iran: Fear of escalation grips risk markets
Recent reports of an Israeli aerial bombardment targeting a key nuclear facility in central Isfahan have sparked a significant shift out of risk assets and into safe-haven investments.