News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Mixed bag in the crypto space...Ether (ETH) outperforming Bitcoin (BTC)...#btc #eth #xrp @DailyFX Prices via @IGcom https://t.co/LpRLnlk1cD
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Gold: -0.37% Oil - US Crude: -1.23% Silver: -2.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/gW8UcpMpRY
  • Heads Up:🇺🇸 Michigan 5 Year Inflation Expectations Prel (JAN) due at 15:00 GMT (15min) Previous: 2.5% https://www.dailyfx.com/economic-calendar#2021-01-15
  • Heads Up:🇺🇸 Michigan Inflation Expectations Prel (JAN) due at 15:00 GMT (15min) Previous: 2.5% https://www.dailyfx.com/economic-calendar#2021-01-15
  • Heads Up:🇺🇸 Business Inventories MoM (NOV) due at 15:00 GMT (15min) Expected: 0.5% Previous: 0.7% https://www.dailyfx.com/economic-calendar#2021-01-15
  • Heads Up:🇺🇸 Michigan Consumer Sentiment Prel (JAN) due at 15:00 GMT (15min) Expected: 80 Previous: 80.7 https://www.dailyfx.com/economic-calendar#2021-01-15
  • $EURJPY dropped below 126.00 this morning, falling to its lowest level since early December. $EUR $JPY https://t.co/VGtNVS26Dn
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: US 500: -0.49% Wall Street: -0.63% FTSE 100: -0.88% France 40: -1.18% Germany 30: -1.22% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/BwiDA601do
  • The US Dollar recovered from the small Retail Sales selloff and was buoyed by strong December Industrial Production numbers, pushing the $DXY to around 90.60, its highest level since the beginning of the week. $USD https://t.co/zOjDOtIMHx
  • Much like the rest of the G10 FX space, the Australian Dollar has struggled for direction with the recent uptrend beginning to stall at 0.78. Get your $AUDUSD update from @JMcQueenFX here: https://t.co/IReLh35w64 https://t.co/EoSXjkxtFU
Trading U.K. CPI- British Pound at Risk for Larger Correction

Trading U.K. CPI- British Pound at Risk for Larger Correction

2013-09-17 04:00:00
David Song, Strategist

- U.K. Inflation to Slow for the Second-Month in August

- Core Consumer Price Growth to Rebound from 2013 Low

Trading the News: U.K. Consumer Price Index

The U.K. Consumer Price report may trigger a more meaningful correction in the GBPUSD as a slower rate of inflation raises the Bank of England’s (BoE) scope to retain its highly accommodative policy stance.

What’s Expected:

Time of release: 09/17/2013 8:30 GMT, 4:30 EDT

Primary Pair Impact: GBPUSD

Expected: 2.7%

Previous: 2.8%

DailyFX Forecast: 2.7% to 3.0%

Why Is This Event Important:

In light of the fresh remarks coming out of the BoE Testimony, it seems as though the central bank will toughen its stance to achieve the 2% target for price growth, and the central bank may start to adopt a more hawkish tone for monetary policy as it continues to operate under its inflation-targeting framework.

Expectations: Bearish Argument/Scenario

Release

Expected

Actual

Average Weekly Earnings inc Bonus (3MoY) (JUL)

1.3%

1.1%

BRC Shop Pirce Index (YoY) (AUG)

--

-0.5%

CBI Trends Selling Price (AUG)

3

0

Nevertheless, businesses in the U.K. may continue to offer discounted prices amid the slowdown in wage growth along with the persistent slack in the real economy, and a soft inflation print may prompt a near-term reversal in the GBPUSD as market participants scale back bets of seeing the BoE move away from its easing cycle.

Risk: Bullish Argument/Scenario

Release

Expected

Actual

Jobless Claims Change (JUL)

-21.0K

-32.6K

Net Consumer Credit (JUL)

0.6B

0.6B

Retail Sales inc Auto (MoM) (JUL)

0.7%

1.1%

However, the recent pickup in private sector activity may encouraged stronger price growth in the U.K., and a better-than-expected CPI print may spark fresh monthly highs in the British Pound as we see a growing number of central bank officials turn upbeat towards the economy.

How To Trade This Event Risk(Video)

Bearish GBP Trade: U.K. CPI Narrows to 2.7% or Lower

  • Need red, five-minute candle following the print to consider a short GBPUSD trade
  • If market reaction favors a sell trade, short GBPUSD with two separate position
  • Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
  • Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bullish GBP Trade: Headline & Core Inflation Tops Forecast

  • Need green, five-minute candle to favor a long GBPUSD trade
  • Implement same setup as the bearish British Pound trade, just in opposite direction

Potential Price Targets For The Release

GBPUSD Daily

Forex_Trading_U.K._CPI-_British_Pound_at_Risk_for_Larger_Correction_body_Picture_2.png, Trading U.K. CPI- British Pound at Risk for Larger Correction

Chart - Created Using FXCM Marketscope 2.0

  • Upward Trending Channel Dating Back to July Continues to Take Shape
  • Relative Strength Index Retains Bullish Trend; Close Below 70 to Trigger Correction
  • Interim Resistance: 1.6000 Pivot to 1.6050 (78.6% Fibonacci retracement)
  • Former Resistance Around 1.5680-90 (38.2% Fib retracement) to Act as New Support

Impact that the U.K. Consumer Price report has had on GBP during the last month

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

JUL 2013

08/13/2013 8:30 GMT

2.8%

2.8%

+37

+13

July 2013 U.K. Consumer Price Index

Forex_Trading_U.K._CPI-_British_Pound_at_Risk_for_Larger_Correction_body_ScreenShot112.png, Trading U.K. CPI- British Pound at Risk for Larger Correction

The headline reading for U.K. inflation narrowed 2.8% in July from 2.9% the month prior, while core consumer price growth slipped to 2.0% amid forecasts for a 2.2% print. Despite the slower rate of price growth, the in-line print propped up the British Pound, with the GBPUSD climbing above the 1.5475 region, but we saw the sterling consolidate during the day as the pair closed at 1.5446.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com

Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, please follow this link

Trade Key Event Risks with DailyFX on Analyst on Demand

Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader

New to FX? Fill Out This Quick Form for a Free Tutorial

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES