The Pound Hit A Fresh High For 2017 On Stronger-than-expected Inflation
AvaTrade | Sep 13, 2017 08:44AM ET
Summary:
- The pound rose further against the dollar to a fresh high of the year on the stronger-than-expected inflation ahead of BOE policy decision on Thursday.
- We will get a flurry of economic pointers today, including U.K. August unemployment rate, EU July industrial production (YoY), U.S. August PPI and weekly oil inventory data from EIA.
The dollar consolidated against a basket of six major rivals in a choppy market below a major H4-period trend resistance on Tuesday (12 September), with the pound catching the eye of investors. According to ONS, the Consumer Prices Index (CPI) 12-month rate was 2.9% in August 2017, higher than the consensus forecast of 2.8%. Meanwhile, the core measure came in at 2.7%, higher than both the previous reading and analysts forecast. In addition, retail sales for August in U.K. increased as well. The sterling extended rallies to a fresh one-year high on the better-than-expected macro data. The renewed hike hopes could continue to lift the pound in the coming days ahead of BOE policy decision on Thursday.
Technical
The dollar index (DXY) reacted off around a major H4-period trend resistance. It will be interesting to watch whether or not the index could break out its short term trading range. Holding below its long term moving averages which flattened further and offered modestly strong resistances, its short term moving averages tended to move towards each other in the short term and will likely turn lower again going forward.
As to non-U.S. currencies, the euro rallied above H1-period EMA60 after choppy consolidation. It will likely fluctuate at its long term moving averages on the 4 hour chart if the single currency fails to sustain its rally on the day. The sterling upside momentum waned in New York session after it rose to a new one-year high. Nonetheless, the currency could maintain its uptrend on the increased expectation of rates hike. The Aussie dollar traded above its major support at H4-period EMA60. Given holding above the short-term support, it will be interesting to observe whether or not the commodity currency could resume its rally.
Get The News You Want
Let’s review the price action of precious metals now. The gold rallied to validate its breakouts origin yesterday after briefly breaking below its major H4-period trend support. It will be a game changer if the yellow metal fails to sustain its rallies and turned lower again going forward. Watch the movements in its short term moving averages and long term moving averages on the 4 hour chart.
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.
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.