GBP/USD – Pound Edges Higher as CPI Beats Estimate

GBP/USD has posted slight gains in the Tuesday session. In North American trade, the pair is trading at 1.2720. On the release front, British CPI climbed 1.2%, edging above the forecast of 1.1%. In the US, there are no major events on the schedule. Wednesday promises to be a busy session. The UK will release key employment data, led by Claimant Count Change. In the US, the Federal Reserve will set the benchmark interest rate and we’ll also get a look at retail sales reports.

In the UK, inflation has moved higher in recent months and this trend was underscored by a strong gain from CPI in November. The key index climbed 1.2%, its highest level since October 2014. Much of the rise in inflation can be attributed to the sharp descent of the British pound, which has lost 15 percent of its value since the Brexit vote in June. This has led to a sharp rise in the cost of imports. With inflation levels moving closer to the BoE’s target of 2.0 percent, many analysts are predicting that the bank could raise interest rates early next year. The BoE is projecting inflation to rise to 2.8 percent in 2018, which could lead to further hikes in order to curb inflation.

BoE More Likely to Hike Than Cut Next

GBP/USD Fundamentals

Tuesday (December 13)

  • 4:30 British CPI. Estimate 1.1%. Actual 1.2%
  • 4:30 British PPI Input. Estimate -0.4%. Actual -1.1%
  • 4:30 British RPI. Estimate 2.1%. Actual 2.2%
  • 4:30 British Core CPI. Estimate 1.3%. Actual 1.4%
  • 4:30 British HPI. Estimate 7.3%. Actual 6.9%
  • 4:30 British PPI Output. Estimate 0.2%. Actual 0.0%
  • 11:00 US NFIB Small Business Index. Estimate 96.7
  • 13:30 US Import Prices. Estimate -0.3%
  • 18:01 US 30-year Bond Auction

Upcoming Key Events

Wednesday (December 14)

  • 4:30 British Average Earnings. Estimate 2.3%
  • 4:30 British Claimant Change. Estimate 6.2K
  • 4:30 British Unemployment Rate. Estimate 4.8%
  • 7:15 BoE Governor Mark Carney Speaks
  • 8:30 US Core Retail Sales. Estimate 0.4%
  • 8:30 US PPI. Estimate 0.1%
  • 8:30 US Retail Sales. Estimate 0.3%
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <0.75%
  • 14:30 US FOMC Press Conference

*All release times are EST

* Key events are in bold

GBP/USD for Tuesday, December 13, 2016

GBP/USD December 13 at 10:10 EST

Open: 1.2676 High: 1.2728 Low: 1.2659 Close: 1.2719

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2351 1.2471 1.2620 1.2778 1.2849 1.2946
  • GBP/USD was flat in the Asian session. The pair has posted gains in the European session and ticked higher in North American trade
  • 1.2620 is providing support
  • 1.2778 is the next resistance line

Further levels in both directions:

  • Below: 1.2620, 1.2471, 1.2351 and 1.2272
  • Above: 1.2778, 1.2849 and 1.2946
  • Current range: 1.2778 to 1.2849

OANDA’s Open Positions Ratio

GBP/USD ratio remains unchanged this week. Currently, long positions have a majority (59%), indicative of trader bias towards GBP/USD continuing to move upwards.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.