GBP Firmer As Sticky Inflation Keeps Pressure On BOE
Headline CPI Drops But Not As Much As Expected
The latest UK inflation data today offered some hope for consumers. Headline CPI was seen dropping back to 8.7% last month, down from 10.1% the prior month. This marks the first time that UK inflation has been back in single digits since August last year. However, the result was a little higher than the 8.2% the market was looking for and with core inflation seen rising against the prior month, the focus is on a further BOE rate hike next month.
Core CPI Rises
Core inflation printed 6.8%, up from the prior month’s 6.2% reading. While obviously moving in the right direction, a welcome sign for UK households and businesses, the key issue here is stickiness. Still more than 4 times the BOE’s target, inflation remains well above other economies in the G7and as such, the focus is on further action to come from the BOE.
Market Reaction
GBP has been a little firmer on the back of the data. The firmest gains have been seen against risk currencies which remain under pressure today given the weaker tone to risk appetite as US debt ceiling uncertainty continues. GBPUSD is showing weaker upside given the safe haven demand we’re seeing for USD currently.
Technical Views
GBPAUD
The correction lower from highs around 1.8980 has seen the market finding strong support into the 1.86 level. Price has since bounced and is now pushing back up towards those highs. Supported by the bull channel and with momentum studies pushing higher, the focus is on further move up and a breakout towards the 1.9170 level next.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.