17 Feb 2015
GBP/USD at risk of a sharp fall in UK CPI – FXStreet
FXStreet (Barcelona) - According to FXStreet Editor and Analyst, Omkar Godbole, markets have priced in the expected decline in CPI (consensus: 0.4%), but a weaker than expected print could trigger a fall in GBP/USD towards 1.53 levels.
Key Quotes
“The GBP/USD pair weakened to a low of 1.5338 yesterday in anticipation of a 0.8% month-on-month fall in the UK inflation in January. Year-on-year the inflation rate is seen slowing down to 0.4% from the previous month’s 0.5%.”
“The fall in GBP/USD seen yesterday indicates the markets could have priced-in the consensus estimate fall in CPI.”
“Hence, we could see a “sell the rumor, buy the fact” trade if the actual inflation figure prints in line with the consensus estimate. In such a case, the pair could extend gains to 1.5430-1.5450 levels.”
“On the other hand, a weaker-than-expected inflation print could add to the bearish momentum and push the pair down to 1.53 levels.”
“Moreover, a weaker-than-expected print could lead to sharp fall in UK 10-year Gilt yields, leading to a weak Pound.”
“Overall, the pair appears trading in the rising channel on the hourly chart, with the upside and the downside capped at 1.5450 and 1.5350 levels respectively. It would take a surprisingly strong or weak CPI print to see the pair breach the channel.”
Key Quotes
“The GBP/USD pair weakened to a low of 1.5338 yesterday in anticipation of a 0.8% month-on-month fall in the UK inflation in January. Year-on-year the inflation rate is seen slowing down to 0.4% from the previous month’s 0.5%.”
“The fall in GBP/USD seen yesterday indicates the markets could have priced-in the consensus estimate fall in CPI.”
“Hence, we could see a “sell the rumor, buy the fact” trade if the actual inflation figure prints in line with the consensus estimate. In such a case, the pair could extend gains to 1.5430-1.5450 levels.”
“On the other hand, a weaker-than-expected inflation print could add to the bearish momentum and push the pair down to 1.53 levels.”
“Moreover, a weaker-than-expected print could lead to sharp fall in UK 10-year Gilt yields, leading to a weak Pound.”
“Overall, the pair appears trading in the rising channel on the hourly chart, with the upside and the downside capped at 1.5450 and 1.5350 levels respectively. It would take a surprisingly strong or weak CPI print to see the pair breach the channel.”