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

Dhwani Mehta FXStreet

The UK November CPIs Overview

The cost of living in the UK as represented by the consumer price index (CPI) is due later on Wednesday at 0930 GMT. The headline CPI inflation is expected to accelerate to 0.2% inter-month in November while the annualized figure is seen ticking a tad lower to 2.3%. 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 1.2700/06 (round number/ Dec 18 high), above which the next upside targets lie at 1.2752/60 (daily R2/ Dec 10 high) and 1.2812 (50-DMA).

On a negative surprise, the GBP/USD pair could fall back to the 5 and 10-DMA confluence near 1.2620 region below which floors open up for a test of 1.2589 (Dec 17 low) and 1.2550 (psychological levels).

Key Notes

Market themes of the Day: Fed rate decision and UK inflation headline

EUR/USD Forecast: Bulls might struggle for follow-through beyond 1.1400 handle ahead of FOMC

UK: Downside risks to inflation data - TDS

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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