Saturday, June 22, 2024
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HomeMarket NewsGBP/USD Jumps to Two-Month High on Inflation News
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GBP/USD Jumps to Two-Month High on Inflation News

Today, the UK’s Consumer Price Index (CPI) figures were released. As per ForexFactory:

→ Annual CPI: actual = 2.3%; forecast = 2.1%; previous = 3.2%.

→ Annual Core CPI: actual = 3.9%; forecast = 3.6%; previous = 4.2%.

This indicates that:

→ Inflation is at its lowest level since 2021.

→ It is nearing the target rate of 2%.

However, Reuters economists had anticipated a sharper fall to 2.1%, driven by lower energy prices.

Service sector inflation, a key indicator for the Bank of England due to its economic significance, only slightly declined to 5.9% from 6%.

Consequently, CNBC reports that market expectations for the Bank of England to ease monetary policy have diminished:

→ The chance of a rate cut in June fell to 15% from 50% prior to the inflation news.

→ The probability of an August rate cut dropped to 40% from 70%.

 

The currency market saw heightened volatility – the GBP/USD rate surged to a two-month high of 1.27555. As the market digested the data, the price began to decline.

FXOpen graph 22.05

Technical analysis of the daily GBP/USD chart reveals:

→ The price is in a large narrowing triangle pattern that started in 2023.

→ The 1.2800 level is crucial, providing resistance last year and in 2024.

→ Today’s candlestick might form a long upper shadow, indicating persistent bearish pressure near 1.2800.

→ This pressure could push the price down to the lower boundary of the ascending channel (shown in black), marking the GBP/USD trajectory from mid-April.

At 21:00 GMT+3 today, the FOMC Meeting Minutes will be released, likely impacting the dollar’s value against other currencies. Prepare for potential volatility spikes.

 

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