When is the UK inflation data and how could it affect GBP/USD?


The UK CPIs Overview

The cost of living in the UK as represented by the Consumer Price Index (CPI) for February month is due early on Wednesday at 07:00 GMT.

Given the recently released mixed employment data, coupled with the firmer economic activity numbers and the doubts over the Bank of England’s (BOE) next moves, today’s British inflation data will be watched closely by the GBP/USD traders. Also increasing the importance of the UK CPI is the looming banking crisis and the policymakers’ push for measures that could help the market ward off the risks.

That said, the headline CPI inflation is expected to decline further from the 41-year high marked in October while easing to 9.8% YoY in February, versus 10.1% prior. Further, the Core CPI, which excludes volatile food and energy items, is likely to remain stagnant near 5.8%. Talking about the monthly figures, the CPI could jump to 0.6% versus -0.6% prior.

Also important to watch is the Retail Price Index (RPI) figures for February, expected to rise to 0.6% MoM and drop to 13.2% YoY versus 0.0% and 13.4% in that order.

Deviation impact on GBP/USD

Readers can find FXStreet's proprietary deviation impact map of the event below. As observed, the reaction is likely to remain confined around 20-pips in deviations up to + or -3, although in some cases, if notable enough, a deviation can fuel movements over 50-60 pips.

fxsoriginal

How could it affect GBP/USD?

GBP/USD picks up bids to reverse the previous day’s pullback from a seven-week high as optimism surrounding the UK’s economic recovery joined the latest chatters that UK PM Rishi Sunak will be able to convince the European Research Group (ERG) and the Democratic Unionist party (DUP) to back his much laborious Brexit deal. Adding strength to the recovery moves could be the US Dollar’s weakness ahead of the all-important Federal Open Market Committee (FOMC) monetary policy meeting.

That said, the recent improvement in the British data and expectations of overcoming the labor problems, and softer UK inflation data may help the GBP/USD bears to retake control. However, the UK CPI may have a little less important for the Cable traders this time as the Fed’s verdict and voting on the Brexit bill in the UK’s House of Commons loom. Even so, a strong UK inflation figure won't hesitate to please the Cable pair buyers as the Bank of England (BoE) is ready for the last hawkish dance.

Technically, a four-month-old horizontal resistance area surrounding 1.2270-90 challenges the GBP/USD bulls cheering a sustained break of the 50-DMA hurdle surrounding 1.2145.

Key notes

GBP/USD resists welcoming bears above 1.2200, UK inflation, Brexit vote and Fed eyed

GBP/USD Price Analysis: Rises back above the 1.2200 mark, supported by 50-DMA

About the UK CPIs

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 the 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).

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD recovers to near 0.6450, shrugs off mixed Australian jobs data

AUD/USD recovers to near 0.6450, shrugs off mixed Australian jobs data

AUD/USD is rebounding to near 0.6450 amid renewed US Dollar weakness in the Asian session on Thursday. The pair reverses mixed Australian employment data-led minor losses, as risk sentiment recovers. 

AUD/USD News

USD/JPY bounces back toward 154.50 amid risk-recovery

USD/JPY bounces back toward 154.50 amid risk-recovery

USD/JPY bounces back toward 154.50 in Asian trading on Thursday, having tested 154.00 on the latest US Dollar pullback and Japan's FX intervention risks. A recovery in risk appetite is aiding the rebound in the pair. 

USD/JPY News

Gold rebounds on market caution, aims to reach $2,400

Gold rebounds on market caution, aims to reach $2,400

Gold price recovers its recent losses, trading around $2,370 per troy ounce during the Asian session on Thursday. The safe-haven yellow metal gains ground as traders exercise caution amidst heightened geopolitical tensions in the Middle East.

Gold News

Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets

Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets

Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.

Read more

Investors hunkering down

Investors hunkering down

Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.

Read more

Forex MAJORS

Cryptocurrencies

Signatures