When are the UK CPIs and how could they affect GBP/USD?

Dhwani Mehta FXStreet

The UK September CPIs Overview

The cost of living in the UK as represented by the consumer price index (CPI) is due later on Wednesday at 0830 GMT. The headline CPI inflation is expected to decelerate to 0.5% inter-month in September while the annualized figure is seen ticking higher to 2.8%. The core inflation rate that excludes volatile food and energy items is expected to have softened to 1.8% last month.

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 80 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 120 pips.

How could it affect GBP/USD?

Upbeat UK CPI figures are likely to offer a fresh lift to the GBP bulls, that could help the rates retest the 1.3200 level, above which the upside targets lie at 1.3250 (psychological levels) and 1.3278 (Sept 21 high).

On a negative surprise, the GBP/USD pair could fall back to the 20-DMA support at 1.3109 below which floors open up for a test of 1.3053 (100-DMA) and 1.3026 (Sept 13 low).

Key Notes

Market themes of the Day: Brexit summit 1.0, the UK inflation and FOMC minutes headline

GBP/USD Forecast: Vulnerable below 1.3200 mark ahead of EU summit, UK CPI, FOMC minutes

GBP/USD Technical Analysis: Cable coiled below 1.3200 ahead of Brussels leadership meeting, Brexit at the forefront

About the UK CPI

The Consumer Price Index released by the Office for National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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