- Trades should be entered few minutes before the release of CPI or post CPI data
- Buy closer to 1.6650 for target of 1.6800 and Stop loss of 1.6590
- In case CPI rises less than market expectations of 2%, avoid entering into long GBPUSD trade recommended above
- Rise in CPI would be supportive for Pound in short run
- Fall in CPI would be negative for Pound in short run
- Strength in Pound due to rise in CPI is an indicator of failed forward guidance
Rise inflation supportive for Currency !
- 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.
- 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%.
- 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
GBPUSD Daily Chart
- Pair has support of rising trend line around 1.6650. The previous cyclical high of 1.668 also acts as a support
- Strong support zone of 1.6650-1.6670. Hence long positions can be initiated in this range for target of 1.68