When is UK CPI and how could affect GBP/USD?

UK May CPI Overview

The UK docket has the CPI report, which will be published later this session at 0830GMT. The consumer prices in the British economy are expected to remain steady at 2.7% in May y/y. While core figures, excluding volatile food and fuel costs, are also expected to remain unchanged at 2.4% in the reported month.

On monthly basis, the consumer prices are expected to drop to 0.2% versus 0.5% booked last.

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 60 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 75 pips.

 How could affect GBP/USD?

On a positive surprise, we could see cable break above 1.2700 barrier, beyond which 1.2770 (key support-turned resistance) could be tested, opening doors for a test of 1.2832 (10-DMA).

Conversely, downbeat CPI report will cause GBP/USD pair to break below 1.2620 (multi-week lows), leading to a subsequent test of 1.2560-50 horizontal support, below which next support lies at 1.2500 (psychological levels.

Key notes

UK: CPI to edge a bit higher again in May, from 2.7% to 2.8% y/y - TDS

UK: CPI likely unchanged at 2.7% y/y – Danske Bank

About UK CPI

The Consumer Price Index released by the National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).