Trade Recommendation

  1. Trades should be entered few minutes before the release of CPI or post CPI data
  2. Buy closer to 1.6650 for target of 1.6800 and Stop loss of 1.6590
  3. In case CPI rises less than market expectations of 2%, avoid entering into long GBPUSD trade recommended above
  4. Rise in CPI would be supportive for Pound in short run
  5. Fall in CPI would be negative for Pound in short run
  6. Strength in Pound due to rise in CPI is an indicator of failed forward guidance

Rise inflation supportive for Currency !

  1. The Pound ended lower against the U.S. dollar on Monday, although it was hovering within close distance of a four-year high amid expectations that the Bank of England may raise rates next year.
  2. The expectations of rate hike would be cemented further if the UK CPI inflation for the month of January rises more than market expectation of 2.0%.
  3. The data scheduled for release today during the European session is likely to trigger a big move in GBP pairs. Rise in inflation would be supportive for pound in short run

Technical Development

GBPUSD Daily Chart

  1. Pair has support of rising trend line around 1.6650. The previous cyclical high of 1.668 also acts as a support
  2. Strong support zone of 1.6650-1.6670. Hence long positions can be initiated in this range for target of 1.68

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