GBP Ticks Higher as Inflation Tops Estimates
- UK inflation rises more than expected, hitting a near six year high of 3.1% in November.
- Wednesday’s weekly earnings and employment release will be closely watched ahead of the Bank of England’s MPC report on Thursday.
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GBP/USD ticked higher after data from the ONS showed UK inflation hitting 3.1%, up from 3% in October. Core y/y inflation remained unchanged at 2.7%. The move in cable was muted ahead of UK wages and employment data to be released on Wednesday and the last Bank of England MPC meeting of 2017 on Thursday.
According to ONS head of inflation Mike Prestwood, “CPI inflation edged above 3 per cent for the first time in nearly six years with the price of computer games rising and air fares falling more slowly than this time last year. These upward pressures were partly offset by falling costs of computer equipment.”
He added that the prices of raw materials and goods leaving factories continued to increase as oil and petrol prices continued to rise.
DailyFX analyst Martin Essex will be covering Wednesday’s UK employment and wages release live. You can join him here.
Chart: GBPUSD One Minute Timeframe (December 12, 2017)
IG Client Sentiment data show 54.5% of traders are net-long GBPUSD with the ratio of traders long to short at 1.2 to 1. The number of traders net-long is 16.3% higher than yesterday and 58.2% higher from last week, while the number of traders net-short is 1.1% higher than yesterday and 21.1% lower from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bearish contrarian trading bias.
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--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.