GBPUSD Price Slips Lower as UK Inflation Falls to a Near Three-Year Low
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- UK inflation hits the lowest level since late 2016.
- GBPUSD drifts lower but short-term direction still driven by Brexit.
Q3 2019 GBP Forecast and Top Trading Opportunities
Sterling (GBP) Slips Lower After Inflation Data, BoE Up Next
Bank of England governor Mark Carney will have noted with interest the latest fall in UK inflation ahead of tomorrow’s BoE MPC decision, with UK prices rising at their slowest rate since late 2016. The ONS report highlighted that the fall ‘was mainly driven by a decrease in computer game prices, plus clothing prices rising by less than last year after the end of the summer sales.’ The latest data will be welcome news for UK consumers, with real wages now rising between 2% and 2.2% in August.
Thursday’s BoE monetary policy decision now comes into view with the central bank expected to leave all monetary policy settings unchanged. Governor Mark Carney will likely mention the latest downturn in inflation, and its expected short-term path, but will again reiterate that the BoE will remain on hold until Brexit is resolved, one way or another.
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GBPUSD has dipped post-release to 1.2455 but the recent uptrend, defined by lower highs from the September 3 low, remains in place. Support remains around 1.2382, made up from a cluster of recent highs and lows, while resistance is pegged between 1.2525 and 1.2582 in the short-term. GBPUSD price action will be driven by the any news from the ongoing UK Supreme Court’s ruling on PM Johnson’s recent prorogation of Parliament, and Brexit talk from the EU, rather than any commentary from the Bank of England tomorrow.
In addition, the Fed is fully expected to cut US interest rates by 0.25% later today, with markets hoping that Fed Chair Jerome Powell’s subsequent commentary will give a steer towards the Fed’s thinking on the state of the US economy.
GBPUSD Daily Price Chart (March - September 18, 2019)
IG Client Sentiment data show that of retail traders are 63.0% net-long of GBPUSD, a bearish contrarian indicator. See how daily and weekly positional changes can change client sentiment.
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