Dailyfx | Nov 18, 2014 01:19AM ET
- U.K. Consumer Price Index (CPI) to Hold at Annualized 1.2% for Second-Month.
- Core Rate of Inflation to Rebound from Lowest Reading Since 2009.
Trading the News: U.K. Consumer Price Index
Beyond the headline reading for U.K. inflation, an uptick in the core Consumer Price Index (CPI) may generate a near-term rebound in GBP/USD as the Bank of England (BoE) largely remains on course to normalize monetary policy in 2015.
What’s Expected:
Why Is This Event Important:
Despite the downward revision to the BoE’s growth & inflation forecast , sticky price growth in the U.K. may spur a greater dissent within the Monetary Policy Committee (MPC), and it seems as though Governor Mark Carney will continue to prepare household & businesses for higher borrowing-costs as the economic recovery becomes more broad-based.
Expectations: Bullish Argument/Scenario
Release |
Expected |
Actual |
Manufacturing Production (MoM) (SEP) |
0.3% |
0.4% |
Jobless Claims Change (OCT) |
-20.0K |
-20.4K |
Average Weekly Earnings ex Bonus (3MoY) SEP) |
1.1% |
1.3% |
Higher wage growth paired with the pickup in business outputs may generate a stronger-than-expected CPI print, and stick price pressures should help to improve the appeal of the sterling as it boosts interest rate expectations.
Risk: Bearish Argument/Scenario
Release |
Expected |
Actual |
GfK Consumer Confidence (OCT) |
-1 |
-2 |
Retail Sales ex Auto (MoM) (SEP) |
0.0% |
-0.3% |
Producer Price Index- Input n.s.a. (YoY) (SEP) |
-0.3% |
-0.4% |
However, U.K. firms may continue to offer discounted prices amid falling input prices along with the slowdown in private-sector consumption, and a dismal inflation report may spur fresh monthly lows in GBP/USD as the Federal Reserve shows a greater willingness to normalize monetary policy in the year ahead.
How To Trade This Event Risk(Video )
Bullish GBP Trade: U.K. Core Inflation Rebounds in October
Bearish GBP Trade: CPI Report Falls Short of Market Forecast
Potential Price Targets For The Release
h3 GBP/USD Daily/h3Impact that the U.K. CPI report has had on GBP during the last release
Period |
Data Released |
Estimate |
Actual |
Pips Change (1 Hour post event ) |
Pips Change (End of Day post event) |
SEP 2014 |
10/14/2014 8:30 GMT |
1.4% |
1.2% |
-49 |
-108 |
September 2014 U.K. Consumer Price Index
The U.K.’s Consumer Price Index (CPI) unexpectedly slipped to a five-year low of 1.2% in September, with the core rate of inflation also narrowing to an annualized 1.5% from 1.9% in August. Indeed, teasing price pressures may encourage the Bank of England (BoE) to retain its current policy throughout the remainder of the year, but it seems as though the central bank will stay on course to raise the benchmark interest rate in 2015 as Governor Mark Carney sees a sustainable recovery in the U.K. The sterling lost ground against its major counterparts following the release, with GBP/USD dipping back below the 1.6000 handle to end the day at 1.5907.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.