Sterling (GBP) Price: UK Inflation Back at 2%, UK Leadership Vote Round 3
Sterling (GBP) Price, Chart and Analysis
- Inflation in-line with market expectations.
- The Conservative Leadership contest is now down to 5 contenders.
Sterling Waits For Leadership Vote, FOMC and BoE
The latest round of UK consumer and retail price data showed price pressure stable in May, extending a pattern seen since the start of the year, with year-on-year inflation running at 2.0% - down from 2.1% - while core inflation nudged a tick lower to 1.7% over the same timeframe.
Commenting on today’s release, ONS Head of Inflation Mike Hardie said, ‘Inflation eased in May as air fares fell back after the Easter highs in April. The overall rate of inflation has remained steady since the start of the year’.
The Conservative Party Leadership contest continues today with just five contenders now remaining. Today’s vote will see the candidate with the lowest number of votes eliminated. Tuesday’s round of voting which saw Dominic Raab leave the contest showed Boris Johnson extend his lead over the other candidates, while Rory Stewart also received a boost and overtook Home Secretary Sajid David.
Boris Johnson 126 votes -- Jeremy Hunt 46 votes -- Michael Gove 41 votes – Rory Stewart 37 votes – Sajid Javid 33 votes.
GBPUSD continues to pull back from Tuesday’s multi-month low with three market moving events over the next 24 hours eyed by traders. Later today the result of the Leadership vote takes front stage, followed by the FOMC meeting, ahead of tomorrow’s Bank of England’s Monetary Policy Meeting. The pullback from Tuesday’s multi-month low currently looks unconvincing and is mainly based on a marginally weaker US dollar. The UK Leadership vote will be the main short-term driver with markets continuing to fear a Hard Brexit as odds-on favorite Brexiteer Boris Johnson continues to hold a commanding lead.
IG Client Sentiment data paints a negative picture for the pair with 81.1% of traders long GBPUSD, a bearish contrarian bias signal. However, recent daily and weekly positional changes give us a stronger bearish trading bias for GBPUSD.
GBPUSD Daily Price Chart (October 2018 – June 19, 2019)
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