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GBP/USD dipped under 1.5950 and is trading at a new cycle low of 1.5946.

Inflation was the last big trigger.

Inflation is at the lowest in 5 years and cable at the lowest in nearly a year. The sell off of the greenback helped the pair recover above 1.60 but this is gone now.

There was a race between the UK and the US as to who will raise the rates first. But now there is a race as to who will push back on rate hikes for a longer time.

However, in this “ugly” contest, the pound seems to be the weaker currency.  The center of global worries is the euro-zone. The UK is by far more exposed to the currency union’s woes. The danger of deflation hangs over the zone and it now threatens to reach the UK.

Tomorrow we will get additional important figures from the UK: employment data.  While employment is certainly improving in the UK, this isn’t news and the focus is now on the figure that combines inflation and employment: salaries.

See how to trade the UK  average earnings index with GBPUSD.

GBPUSD lowest since 2013 technical 30 minute chart October 14 2014