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.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • The Australian Dollar and New Zealand Dollar tend to rise with stocks. They have recently fallen despite gains in the #SP500. What does this mean for $AUDUSD and $NZDUSD ahead? #AUD #NZD #RBA #RBNZ - https://www.dailyfx.com/forex/fundamental/article/special_report/2020/01/17/AUDUSD-NZDUSD-Outlook-Looks-Past-Stocks-to-Rate-Cut-Bets.html?CHID=9&QPID=917702 https://t.co/ddf2fV7Kyl
  • A few snippets from today's commentary. Check out the link below for the full story (via @DailyFX). https://t.co/I31tuq764r https://t.co/x0BaiOFA1P
  • Have you joined @DailyFX @facebook group yet? Discuss your #forex strategies and brush up on your skills with us here: https://t.co/jtY1G7g8yx https://t.co/e2YrN3dBrl
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.00%, while traders in France 40 are at opposite extremes with 79.59%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/UL7hqSD2Ki
  • US Dollar Forecast: $USD Lacking Impetus Ahead of Consumer Sentiment #Forex traders shift focus away from US-China trade deal headlines - perhaps toward the monthly release of #ConsumerSentiment data for volatility and clues on the Greenback's next move https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2020/01/16/us-dollar-forecast-usd-lacking-impetus-ahead-of-consumer-sentiment.html
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.11% 🇦🇺AUD: -0.02% 🇯🇵JPY: -0.03% 🇨🇭CHF: -0.05% 🇬🇧GBP: -0.06% 🇨🇦CAD: -0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/Kxcb9EtIWb
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.45% France 40: 0.26% Wall Street: 0.07% US 500: 0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/I5YIsKQAog
  • 🇯🇵 JPY Tertiary Industry Index (MoM) (NOV), Actual: 1.3% Expected: 1.0% Previous: -5.2% https://www.dailyfx.com/economic-calendar#2020-01-17
  • The $JPY has weakened as a bounce-back in risk appetite saps haven-asset demand. However, the old uptrend line still provides clear resistance. Get your market update from @DavidCottleFX HERE:https://t.co/IMhgQ9jbF9 https://t.co/I7087olftk
  • Heads Up:🇯🇵 JPY Tertiary Industry Index (MoM) (NOV) due at 04:30 GMT (15min), Actual: N/A Expected: 1.0% Previous: -4.6% https://www.dailyfx.com/economic-calendar#2020-01-17
GBP May Fall on CPI as Murky Data Inflames BoE Easing Bets

GBP May Fall on CPI as Murky Data Inflames BoE Easing Bets

2020-01-15 08:00:00
Dimitri Zabelin, Junior Currency Analyst
Share:

British Pound, Bank of England, UK CPI – Talking Points

  • The British Pound could suffer from critical CPI statistics
  • Soft economic data has strengthened case for BoE easing
  • What has recently changed in GBP and why is it crucial?

The British Pound may fall if CPI statistics underwhelm and inflame what are already kindling ‘near-term stimulus’ expectations from the Bank of England (BoE). Economic data out of the UK has been tending to underperform relative to economists’ expectations as Brexit uncertainty chips away at business confidence. While the fundamental risks are temporarily abating, Sterling continues to find itself under pressure.

GBP May Fall on CPI

Year-on-year CPI is expected to remain unchanged at 1.5 percent, with its core counterpart – excluding volatile inputs like food and energy – is also anticipated to remain frozen at its prior print of 1.7 percent. Since peaking in November 2017, price growth has been on a downtrend and continues to hover below the central banks’ 2 percent target.

Chart showing CPI Data

Part of the weakness in CPI comes from the disinflationary impact of the US-China trade war that has compounded the UK’s contraction in industrial production; and officials have noticed. Last week, policymakers said the spell of economic weakness may require a “prompt response” in the form of ‘near-term stimulus’. Sterling subsequently fell.

What this indicates is the British Pound is once again sensitive to economic data to the extent that it has the capacity to bring the BoE easing timeline closer if prevailing conditions warrant it. This is a new trend relative to most of 2019 where it remains relatively impervious to sour economic data amid the BoE’s stance to only adjust interest rates until after Brexit. The recent comments from officials suggests their position has changed.

GBP/USD Technical Analysis

GBP/USD continues to remain range-bound following its spike on the UK election outcome and the spectacular decline that followed. The pair is now approaching support at 1.2905 where buying pressure may overcome the downside pressure of the sellers, though sour CPI data may support the latter and overwhelm the former. A break below 1.2905 opens the door to testing a multi-tiered floor between 1.2769 and 1.2816. GBP/USD – Daily Chart

Chart showing GBP/USD

GBP/USD chart created using TradingView

BRITISH POUND TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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

DISCLOSURES

News & Analysis at your fingertips.