The UK May 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 arrive at 0.3% inter-month in May while the annualized figure is seen a touch lower at 2.0%. The core inflation rate that excludes volatile food and energy items is also likely to have ticked slightly lower to 1.7% 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?
“From a technical perspective, bearish traders are likely to wait for a sustained break through the 1.2500 handle before positioning for any further near-term depreciating move. Below the mentioned support, leading to a subsequent weakness below the 1.2480-75 region will reaffirm the near-term bearish bias and accelerate the slide further towards challenging yearly swing lows support near the 1.2400-1.2395 region. On the flip side, immediate resistance is pegged near the 1.2600 important horizontal support breakpoint, above which a bout of short-covering could lift the pair back towards the 1.2655-60 supply zone en-route the 1.2700 handle and the 1.2725-30 supply zone,” FXStreet’s Analyst Haresh Menghani notes.
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).
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