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UK Inflation Rises Again
GBPUSD is on watch today with the latest FOMC decision tonight presenting the risk of big USD volatility ahead of year end. This morning, the latest UK economic data showed inflation rising again last month. Headline annualised CPI rose to 2.6% from 2.3% prior, in line with forecasts. The increase has further endorsed the view that the BOE is likely to hold rates unchanged when it meets tomorrow. While there are concerns over the health of the UK economy which, alone, might argue the case for a further easing, the recent uptick in inflation argues for caution.
FOMC In Focus
Looking ahead to the FOMC tonight, the Fed is widely expected to cut rates by a further .25%. However, expectations are split over how dovish the bank will sound beyond today’s meeting. With inflation rising recently and jobs data still firm, traders have been scaling back Fed rate-cut projections beyond today with pricing for a cut by next March now just above the 50% level. If the Fed cuts today but signals that a slower pace of easing is likely ahead, this should keep USD supported near-term, limiting any rally in GBPUSD. Only a dovish message from the Fed today is likely to see USD weaken near-term.
Technical Views
GBPUSD
For now, price remains atop the 1.2677 level and above the bull trend line. While this holds, focus is on a test of the 1.2832 level next, which bulls need to break to alleviate bearish risks. Below here, 1.2482 is the key support to watch ahead of the deeper 1.2337 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.