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13 February 2018

Forex Technical analysis

Post-UK CPI Release GBPUSD Technical Analysis

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UK January CPI inflation was unchanged at 3.0%. How has this impacted the GBPUSD pair? Learn this from the Post-UK CPI Release GBPUSD Technical Analysis.

13 February, HotForex – Sterling is seen spiking higher on the anticipation of the announcement for inflation data out of the UK earlier. The Sterling has started the week on a settled footing after Her Majesty’s currency finished last week under pressure.  It was near flat to the dollar and euro, showing a 0.2% decline versus the yen until the spike seen today.

Post-UK CPI Release GBPUSD Technical Analysis

Today, however, the Cable extended higher up to 1.3900 level, however, based on very short time-frame, the upwards move has been seen reversing immediately, on the announcement of the actual CPI,  PPI data and Retail Sales as well.

UK January CPI unexpectedly remained at 3.0% y/y, the same as in December contrary to the median forecast for a dip to 2.9% y/y. Core CPI also lifted to 2.7% y/y from 2.5%, above the expected 2.6% y/y rate. The outcome still fits BoE projections, which ultimately expects CPI to decline to 2.2% y/y by Q1 2020. PPI data showed input prices gaining 4.7% y/y, down from 5.4% y/y in the month prior, and output prices rising 2.8% y/y, down from 3.3% in December.

The above-forecast headline sparked a rally in sterling, which gained about 40 pips versus the dollar in the wake of the data release. The data follows the BoE’s hawkish guidance shift last week, which said monetary policy may have to be tightened sooner and by more than envisaged previously as a consequence of rising demand and lackluster productivity.

Nevertheless, despite this move lower by 35 pips on the bottom of the hour, the pair manage to be held above today’s lows, and above the 200-period EMA, in the 30-Minutes chart, and in the  4-hour chart as well. The GBPUSD managed to cross up to the upper Bollinger Bands pattern in every intra-day chart, while it broke above the latest swing highs on the 30-Minute and hourly chart It is currently testing the round 1.3900 level.

Therefore an hourly closing above this level could trigger a long position up to 1.3940 (50-period EMA in the hourly chart). In a Daily timeframe, a closed today above 1.3900, suggest a retest of the 1.4000 level and the 50% retracement level at 1.4040, since January 25.

Short-term momentum indicators are indicating further upside momentum, with Stochastic indicator crossing the overbought territory while MACD oscillator has turned positive.

Disclaimer

This article about Post-UK CPI Release GBPUSD Technical Analysis was written by Andria Pichidi, Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.

All information provided gathered from reputable sources. Any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. We assume no liability for any loss arising from any investment made based on the information provided in this communication.

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