GBP/USD: Modestly changed below 21-day SMA ahead of UK CPI
- GBP/USD looks for direction amid a lack of fresh catalysts from the UK.
- The shrinking gap between the Tory and the Labor leadership in December polls join pressure on the UK PM to release Russian meddling report.
While the absence of major catalysts from the UK has recently tamed the GBP/USD pair’s moves, market’s fear ahead of the key data/events also contributes to the latest inactivity. The cable seesaws around 1.2850 during pre-London open on Wednesday.
Following the mixed readings of British employment details, the GBP/USD pair witnessed another negative in the form of the pressure on the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson to release a report concerning the Russian meddling in 2016 Brexit referendum. The fresh push can be ascertained with the UK Mirror’s story quoting anonymous witness that alleges Russian PM Vladimir Putin of deploying online trolls to deepen political strife in the UK.
Elsewhere, the trade concerns between the United States (US) and China are getting grave with the Trump administration pushing for a successful phase one talks by indirectly threatening to increase tariffs on the failure to do so. Further, the US Federal Reserve (Fed) policymakers have been quite upbeat off-late and add strength to the US dollar (USD).
Prices now await October month Consumer Price Index (CPI) data from the UK ahead of watching over the US CPI for the same month as well the Fed Chair Powell’s testimony. While the US inflation numbers are less likely to deviate, the Fed Chair will be closely observed to confirm the recent optimism among the policymakers.
On the other hand, the UK CPI could weaken to 1.6% versus 1.7% prior on YoY basis while likely declining to -0.1% from +0.1% earlier on the MoM basis. Analysts at the TD Securities said, “We look for CPI to slip from 1.8% y/y in September to 1.5% in October (mkt 1.6%), in line with the BoE's forecast from the November MPR. The entire deceleration in inflation is due to energy prices; household energy prices will be affected by the OFGEM cap, while fuel prices are also likely to decline a bit on a y/y basis. Stripping out the volatility, we're looking for core CPI to hold steady at 1.7% y/y (mkt 1.7%).”
Technical Analysis
A Doji candle on the daily chart and a downward sloping trading formation since late-October keep the cable bears hopeful unless prices rally beyond 1.3000 round-figure.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
