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

Dhwani Mehta FXStreet

The UK December 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 steady at 0.2% inter-month in December while the annualized figure is seen ticking a tad lower to 2.1%. The core inflation rate that excludes volatile food and energy items is expected to have remained unchanged at 1.8% last month.

Just ahead of the UK CPI report release, the BOE Governor Mark Carney is scheduled to testify, along with three Financial Policy Committee members, on the Financial Stability Report (FSR) before the Treasury Select Committee (TSC), in London at 0915 GMT. Markets will watch out for any hints on the monetary policy path, in light of the crushing Brexit vote defeat.

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 could offer a fresh lift to the GBP bulls, that could help the rates retest 1.2890/1.2900 (post-Brexit vote high/ round number), above which the next upside targets lie at 1.2931 (Jan 14 high) and 1.2982 (2000-DMA).

On a negative surprise, the GBP/USD pair could fall back to the daily pivot at 1.2820 below which floors open up for a test of 1.2807 (10-DMA) and 1.2750 (psychological levels).

Key Notes

Market themes of the Day: German and UK inflation headlines day after Brexit deal historic failure

GBP futures: further consolidation on the cards

GBP/USD Forecast: Investors look past May’s Brexit vote defeat, Carney's testimony/UK CPI eyed

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.

EUR/USD keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD trades with negative bias, eyes 1.3600 ahead of UK jobs data

The GBP/USD pair trades with a negative bias for the second straight day, though it lacks bearish conviction and holds above the 1.3600 mark through the Asian session on Tuesday. Traders now look forward to the release of the UK monthly jobs report, which will influence the British Pound and provide some impetus to the currency pair.

Gold sticks to a negative bias below $5,000; lacks bearish conviction

Gold remains depressed for the second consecutive day and trades below the $5,000 psychological mark during the Asian session on Tuesday, as a positive risk tone is seen undermining safe-haven assets. Meanwhile, bets for more interest rate cuts by the Fed keep a lid on the recent US Dollar bounce and act as a tailwind for the non-yielding bullion, warranting caution for bearish traders ahead of FOMC minutes on Wednesday.

AI Crypto Update: Bittensor eyes breakout as AI tokens falter

The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February.

US CPI is cooling but what about inflation?

The January CPI data give the impression that the Federal Reserve is finally winning the war against inflation. Not only was the data cooler than expected, but it’s also beginning to edge close to the mystical 2 percent target. CBS News called it “the best inflation news we've had in months.”

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.