Presentation of British CPIs
The cost of living in the UK as represented by the Consumer Price Index (CPI) for the month of April is due early Wednesday at 06:00 GMT. Inflation figures will be key for traders of GBP / USD pairs given the investigation period which includes virus locking.
Headline CPI inflation should reach 0.9% on an annual basis, lower than the previous one + 1.5%. The core CPI which excludes volatile food and energy products is expected to have increased 1.5% year-over-year last month from the previous increase of 1.6%.
In this regard, TD Securities analysts said, “We see some upside risk for April’s inflation data, looking for a core CPI slightly below 1.5% on a year (market of 1.3%) and a global CPI which should 1.0% over one year. “
Impact of the spread on GBP / USD
Readers can find FX Street’s proprietary deviation impact map below. As observed, the reaction is likely to remain confined between 15 and 80 pips within ranges of 2 to -3, although in some cases, if it is sufficiently noticeable, a deviation can fuel movements of up to 120 pips.
How could this affect GBP / USD?
At press time before the London opening on Wednesday, the GBP / USD climbed to 1.2267, up 0.10% on one day, while posting a three-day winning streak. Despite the general weakness of the US dollar in favor of the pair, investors remain cautious before the release of British CPI data, as the lockout period has been disappointing for Britain. As a result, lower than expected UK price pressure data may weigh on the pair’s recent recovery. However, any surprise following in the footsteps of the unemployment rate might not hesitate to break the 50-day SMA for once more.
FXStreet’s Yohay Elam expects UK currencies to fall if inflation data approaches zero:
UK inflation figures for April are expected to show a considerable deceleration, just below 1%. The closer it gets to zero, the greater the chances that the BOE will fall below 0% and the greater the potential slide of the pound.
GBP / USD price analysis: 50 day SMA struggles, monthly resistance turned into support
Inflation overview in the UK: falling and sub-zero rate hike on the way? Sterling could suffer
About British CPIs
The Consumer Price Index published by the Office for National Statistics is a measure of price developments by comparing the retail prices of a representative basket of goods and services. The purchasing power of GBP is driven by inflation. The CPI is a key indicator for measuring inflation and changes in purchasing trends. Generally, a high reading is considered positive (or bullish) for the GBP, while a low reading is considered negative (or bearish).