HelenRush

GBP: CPI sends signals to the BoE

FX:GBPUSD   British Pound / U.S. Dollar
The headline UK CPI             came at 3.1% in November, which is the highest since March 2012. The GBPUSD             gained initially on the release, but struggled to keep gains and met the sell interest in the 1.3380 area.
The CPI             reading peaked above 3.0%, which means the BoE chief will have to write an explanation letter to the finance minister. Basically, the faster inflation rises, the more aggressive should be monetary tightening. So today’s numbers are theoretically GBP-positive. But there are a few reasons why the currency reaction is so muted.
Firstly, the market is still focused on Brexit drama which despite the latest progress still involves risks and uncertainties. That’s why traders tend to sell GBP on rallies lately. Secondly, the pound is nervous ahead of the upcoming events – tomorrow’s employment and weekly earnings data as well as the BoE meeting on Thursday.
Despite today’s CPI             figures, the market participants doubt that Mark Carney will embark on a more aggressive rhetoric after a so-called “dovish hike” in November, as many Brexit issues are still unresolved and pose risks to the economy.
Nevertheless, there is still a chance that the Central Bank will note the progress in Brexit negotiations and hint at the need of faster policy tightening due to the fears of inflation overheating. If so, the pound may attract buyers in the area of December lows above 1.33, which are attractive for opening longs. In this scenario, the initial bullish target is 1.3380. The move above will introduce scope to 1.34 and higher.
EN English (UK)
EN English
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
AR العربية
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out