Fundamentals:- Today’s CPI Y/Y reading for the U.K. dropped from 2.7% to 2.5%. That is the second consecutive drop since inflation hit 3% in February this year. After the increase in inflation after Brexit it was starting to look positive for a rise in interest rates towards the end of the year. However, after this latest reading we could end up having to sit tighter on a lower GBP.
The GBP/USD reacted by falling below 14200 briefly before making a slight recovery to 14230. It had recently been the highest since the Brexit Vote results.
Economists polled by Reuters suggested that the BoE would raise rates from 0.25 to 0.75 and many have held to that even after this data release; but optimism of a second rate hike towards the end of the year have faded. When trading the GBP we need to look at how much of this rate rise is already priced into the GBP/USD.
The BoE is expecting wage growth to grow quicker than inflation in the second half of the year, so worth keeping an eye on. For now I am expecting the GBP to weaken against stronger currencies. The JPY still has the safe haven qualities that could come into play with the up and down trade war possibilites and the Syria Geopolitical aspect.
Technicals:-The GBP/JPY shows a nice double top pattern with a break below the area of support. A pull back to this level and it becoming resistance could be the opportunity to sell. Get the full analysis and trading levels on the signals and analysis page of the main website at boafx Trading Signal Solutions.
The GBP/USD reacted by falling below 14200 briefly before making a slight recovery to 14230. It had recently been the highest since the Brexit Vote results.
Economists polled by Reuters suggested that the BoE would raise rates from 0.25 to 0.75 and many have held to that even after this data release; but optimism of a second rate hike towards the end of the year have faded. When trading the GBP we need to look at how much of this rate rise is already priced into the GBP/USD.
The BoE is expecting wage growth to grow quicker than inflation in the second half of the year, so worth keeping an eye on. For now I am expecting the GBP to weaken against stronger currencies. The JPY still has the safe haven qualities that could come into play with the up and down trade war possibilites and the Syria Geopolitical aspect.
Technicals:-The GBP/JPY shows a nice double top pattern with a break below the area of support. A pull back to this level and it becoming resistance could be the opportunity to sell. Get the full analysis and trading levels on the signals and analysis page of the main website at boafx Trading Signal Solutions.
Trade active:
Trade triggered at 15270
Trade active:
Moving stop loss to 15220 locking in 50 pips