As the race for the next British PM is in the headlines and with Brexit uncertainty overshadowing other economic developments, many forex traders may ignore key inflation data which will be released this morning. The Bank of England has entered into a stealthy hawkish mode for an interest rate increase with commentary that Brexit will not dictate monetary policy and that elevated inflationary pressures would warrant an increase in interest rates for long-term stability of the economy. Most forex trading strategies don’t account for the potential of a British Pound rally as the risk of a no-deal Brexit and a global economic recession are on the rise. How will today’s series of inflation reports impact price action in the GBPCAD which rests at strong support levels?
Here are the key factors to keep in mind today for British Pound trades:
- UK CPI: The UK CPI for May is predicted to increase by 0.3% monthly and by 2.0% annualized. Forex traders can compare this to the UK CPI for April which increased by 0.6% monthly and by 2.1% annualized. The Core CPI for May is predicted to increase by 1.7% annualized and the CPI Including Housing Costs is predicted to increase by 1.9% annualized. Forex traders can compare this to Core CPI for April which increased by 1.8% annualized and to the CPI Including Housing Costs which increased by 2.0% annualized.
- UK PPI: The UK PPI Input for May is predicted to increase by 0.2% monthly and by 0.8% annualized. Forex traders can compare this to the UK PPI Input for April which increased by 1.1% monthly and by 3.8% annualized. The UK PPI Output for May is predicted to increase by 0.2% monthly and by 1.8% annualized. Forex traders can compare this to the UK PPI Output for April which increased by 0.3% monthly and by 2.1% annualized. The UK PPI Core Output for May is predicted to increase by 0.1% monthly and by 2.0% annualized. Forex traders can compare this to the UK PPI Core Output for April which increased by 0.2% monthly and by 2.2% annualized.
- UK RPI: The UK RPI for May is predicted to increase by 0.2% monthly and by 2.9% annualized. Forex traders can compare this to the UK RPI for April which increased by 1.1% monthly and by 3.0% annualized. The UK RPI Excluding Mortgage Interest Payments for May is predicted to increase by 2.9% annualized. Forex traders can compare this to the UK RPI Excluding Mortgage Interest Payments for April which increased by 3.0% annualized.
- UK House Price Index: The UK House Price Index for April is predicted to increase by 1.1% annualized. Forex traders can compare this to the UK House Price Index for March which increased by 1.4% annualized.
- UK CBI Trends Total Orders and CBI Trends Selling Prices: UK CBI Trends Total Orders for June are predicted at -12 and CBI Trends Selling Prices are predicted at -3. Forex traders can compare this to CBI Trends Total Orders for May which were reported at -10 and to CBI Trends Selling Prices which were reported at -1.
The much anticipated FOMC announcement will steal the limelight away from the Canadian CPI report which is anticipated to show easing of inflationary pressures. Economists expect the Bank of Canada to remain on the sidelines for the time being and await how a monetary policy change by the US central bank will play out. Given the dependence of Canada’s economy on commodity exports and the growing spat with China, Canadian Dollar weakness should be accounted for. Will bears launch an attack on the Canadian currency amid a short-covering wave in the GBPCAD? Did you prepare your FX trading approach for a spike in volatility?
Here is the key factor to keep in mind today for Canadian Dollar trades:
- Canadian CPI: The Canadian CPI for May is predicted to increase by 0.1% monthly and by 2.1% annualized. Forex traders can compare this to the Canadian CPI for April which increased by 0.4% monthly and by 2.0% annualized. The Canadian Core CPI for May is predicted to increase by 1.9% annualized. Forex traders can compare this to the Canadian Core CPI for April which increased by 1.8% annualized. The Core CPI-Median for May is predicted to increase by 1.9% annualized and the Core CPI-Trim is predicted to increase by 2.1% annualized. Forex traders can compare this to the Core CPI-Median for April which increased by 1.9% annualized and to the Core CPI-Trim which increased by 2.0% annualized.
Should price action for the GBPCAD remain inside the or breakout above the 1.6760 to 1.6830 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.6800
- Take Profit Zone: 1.6970 – 1.7135
- Stop Loss Level: 1.6700
Should price action for the GBPCAD breakdown below 1.6760 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.6720
- Take Profit Zone: 1.6480 – 1.6590
- Stop Loss Level: 1.6760
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