The UK April CPIs overview
The cost of living in the UK as represented by the consumer price index (CPI) is due later today at 0830 GMT. The CPI inflation is expected to jump to 0.5% m/m in April while the annualized figure is seen steady at 2.5%. The core inflation rate that excludes volatile food and energy items is expected to decelerate to 2.2% last month.
Deviation impact on GBP/USD
Readers can find FX Street’s proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 80 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 120 pips.
How could it affect GBP/USD?
According to Haresh Menghani, Analyst at FXStreet, “A sustained weakness below the 1.3400 handle would reinforce the bearish bias and accelerate the downfall towards 1.3345 intermediate support en-route its next major support near the 1.3300 round figure mark.”
“On the upside, up-move back above mid-1.3400s might continue to face stiff resistance near the 1.3500 handle, which if cleared might trigger a short-covering bounce but is likely to be capped at the very important 200-day SMA barrier near the 1.3560-65 region,” Haresh adds.
Key Notes
Eurozone PMI and UK CPI in focus today – Danske Bank
GBP/USD trading on the backfoot ahead of UK CPI figures
European FX Outlook: The Eurozone PMI and the UK inflation headline the agenda
About the UK CPI
The Consumer Price Index released by the Office for National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).
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