When are the UK CPIs and how could it affect GBP/USD?

The UK January CPI overview

The cost of living in the UK as represented by the consumer price index (CPI) is due at 9:30 GMT. The CPI inflation is expected to soften -0.6% m/m in January with the annual figure decelerating to 2.9% y/y. The core inflation rate that excludes volatile food and energy items is also expected to tick higher to 2.6% in January.

How could it affect GBP/USD?

According to Jim Langlands at FX Charts, “As we said previously, Cable remains very choppy in the short term but the daily momentum indicators still hint that the general direction will be lower, so trading from the short side is still preferred. While the short-term momentum indicators look neutral I would stand aside but the dailies still look heavy and I suspect another run towards 1.3765 could be on the cards at some stage, below which would open the way to 1.3690/00.”

“On the topside, the initial Fibo resistance will be seen at 1.3875 and again at 1.3900 and using this as a guide to sell into is preferred today,” Jim adds.

Key Notes

UK: Key events today – Nomura

UK: CPI to remain unchanged at 3.0% y/y in January – TDS

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).