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GBP/USD – Steady as CPI Continues to Slide

The pound is stable on Tuesday, as GBP/USD is trading in the mid-1.53 range. On the release front, British CPI dropped to 0.3%, matching the forecast. In the US, the Empire State Manufacturing Index slipped to 7.8 points, missing expectations.

British inflation indicators continue to point to sagging inflation. CPI, the primary gauge of consumer inflation, dipped to 0.3% in January, down from 0.5% a month earlier. This marked a record low reading, and BOE Governor Mark Carney is now required to write a letter to the Chancellor of the Exchequer for a second straight month, as inflation has dropped more than 1% below the BOE’s target of 2.0%. Weak inflation levels have eased pressure on the BOE to raise rates, raising speculation that the central bank will not raise rates in 2015. With the US Federal Reserve moving in the opposite direction, divergence with the BOE could continue to weigh on the pound.

In the US, Empire State Manufacturing Index slipped to 7.8 points in February, down sharply from 10.0 points a month earlier. The markets had expected a reading of 8.9 points. This weak reading follows last week’s disappointing reports from retail sales and consumer confidence. On Wednesday, we could see some movement from GBP/USD with the release of three key events – the Federal Reserve minutes, Building Permits and PPI.

GBP/USD for Tuesday, February 17, 2015

GBP/USD February 17 at 16:15 GMT

GBP/USD 1.5334 H: 1.5401 L: 1.5316

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5008 1.5165 1.5282 1.5392 1.5505 1.5642

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Tuesday, continuing the trend seen a day earlier. This is not consistent with the pair, which is almost unchanged on the day. The ratio has a majority of long positions, indicative of trader bias towards the pound moving higher.

GBP/USD Fundamentals

*Key releases are highlighted in bold

*All release times are GMT

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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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