Forex traders will get a broad range of inflation data out of the UK today. Some Bank of England MPC members turned more dovish as the economy struggled in the last two months of 2019. The Brexit transition period and pending trade discussions with the EU are clouding the outlook. The GBPCAD descended into a major horizontal support area, but how will this morning’s inflation data impact price action? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
The Canadian Dollar and the British Pound were two of just three G-10 currencies that outperformed the US Dollar in 2019, but against each other, the British Pound enjoyed a solid rally against the Canadian Dollar. This advance was interrupted by a sell-off that took this currency pair into support, with the bullish chart pattern intact. How will the GBPCAD react to today’s inflation data? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
Here are the key factors to keep in mind today for British Pound trades:
- UK CPI: The UK CPI for December is predicted to increase by 0.2% monthly and by 1.5% annualized. Forex traders can compare this to the UK CPI for November, which increased by 0.2% monthly 1.5% annualized. The Core CPI for December is predicted to increase by 1.7% annualized and the CPI Including Housing Costs is predicted to increase by 1.6% annualized. Forex traders can compare this to Core CPI for November, which increased by 1.7% annualized and to the CPI Including Housing Costs, which increased by 1.5% annualized.
- UK PPI: The UK PPI Input for December is predicted to increase by 0.2% monthly and to decrease by 0.9% annualized. Forex traders can compare this to the UK PPI Input for November, which decreased by 0.3% monthly and by 2.7% annualized. The UK PPI Output for December is predicted to increase by 0.1% monthly and 1.0% annualized. Forex traders can compare this to the UK PPI Output for November, which decreased by 0.2% monthly, and which increased by 0.5% annualized. The UK PPI Core Output for December is predicted to flat at 0.0% monthly, and to increase by 1.0% annualized. Forex traders can compare this to the UK PPI Core Output for November, which decreased by 0.1% monthly, and which increased by 1.1% annualized.
- UK RPI: The UK RPI for December is predicted to increase by 0.4% monthly and by 2.3% annualized. Forex traders can compare this to the UK RPI for November, which increased by 0.2% monthly and 2.2% annualized. The UK RPI Excluding Mortgage Interest Payments for December is predicted to increase by 2.3% annualized. Forex traders can compare this to the UK RPI Excluding Mortgage Interest Payments for November, which increased by 2.3% annualized.
- UK House Price Index: The UK House Price Index for November is predicted to increase by 1.0% annualized. Forex traders can compare this to the UK House Price Index for October, which increased by 0.7% annualized.
Here is the key factor to keep in mind today for Canadian Dollar trades:
- Canadian Existing Home Sales: Canadian Existing Home Sales for December are predicted to increase by 0.2% monthly. Forex traders can compare this to Canadian Existing Home Sales for November, which increased by 0.6% monthly.
Should price action for the GBPCAD remain inside the or breakout above the 1.6920 to 1.7040 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.7010
- Take Profit Zone: 1.7270 – 1.7345
- Stop Loss Level: 1.6900
Should price action for the GBPCAD breakdown below 1.6920 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.6850
- Take Profit Zone: 1.6635 – 1.6720
- Stop Loss Level: 1.6920
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