British CPI, released each month, is the primary gauge of consumer inflation and is keenly anticipated by the markets. A reading which is higher than the market forecast is bullish for the pound.
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Tuesday at 9:30 GMT.
Indicator Background
Analysts consider CPI one of the most important economic indicators and should be treated as a market-mover by traders. An unexpected reading from British CPI can quickly affect the direction of GBP/USD.
CPI continues to head upwards. The index improved to 1.8% in January, shy of the forecast of 1.9%. The upward direction is expected to continue, with an estimate of 2.1%.
Sentiments and levels
The Federal Reserve pushed the rate trigger last week and more moves are expected this year. With the Bank of England maintaining a neutral policy regarding rate movement, monetary divergence continues to favor the greenback. The US economy continues to perform well, so sentiment for the US dollar remains strong. As well, the uncertainty over Brexit negotiations will continue to weigh on the British pound
Technical levels, from top to bottom: 1.2706, 1.2511, 1.2385, 1.2218, 1.2080, and 1.1943
5 Scenarios
- Within expectations: 1.7% to 2.5%. In this scenario, GBP/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 2.6% to 3.0%: A stronger reading than predicted could push the pair above one resistance line.
- Well above expectations: Above 3.0%: An unexpectedly strong rise could push GBP/USD upwards, with a second line of resistance at risk.
- Below expectations: 2.0% to 2.4%: A lower than expected reading could pull the pair downwards, with one support level at risk.
- Well below expectations: Below 2.0%: A sharp decline could see the pair break below a second support level.
For more on the pound, see the GBP/USD forecast.
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