The British Pound slumped yesterday after reports surfaced that PM Johnson seeks to pass a bill which will make an extension of the transition period illegal. UK employment data came in better-than-expected yesterday, but the GBPJPY corrected into its next horizontal support area. How will today’s inflation data impact price action? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Japanese exports and imports posted a steep contraction in November, reminding markets that the global economic slowdown remains in place. The phase-one trade deal between the US and China lacks substance while Brexit worries are surfacing once again. This allowed bears to reverse the GBP/JPY from its current highs, but what impact will this morning’s inflation data out of the UK have? Today’s fundamental analysis will take a look at price action in both directions.
Here are the key factors to keep in mind today for British Pound trades:
- UK CPI: The UK CPI for November is predicted to increase by 0.2% monthly and by 1.4% annualized. Forex traders can compare this to the UK CPI for October, which decreased by 0.2% monthly and increased by 1.5% annualized. The Core CPI for November is predicted to increase by 1.7% annualized and the CPI Including Housing Costs is predicted to increase by 1.5% annualized. Forex traders can compare this to Core CPI for October, 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 November is predicted to increase by 0.1% monthly and to decrease by 2.5% annualized. Forex traders can compare this to the UK PPI Input for October, which decreased by 1.3% monthly and by 5.1% annualized. The UK PPI Output for November is predicted flat at 0.0% monthly and to increase by 0.8% annualized. Forex traders can compare this to the UK PPI Output for October, which decreased by 0.1% monthly, and which increased by 0.8% annualized. The UK PPI Core Output for November is predicted to increase by 0.1% monthly and by 1.3% annualized. Forex traders can compare this to the UK PPI Core Output for October, which decreased by 0.1% monthly, and which increased by 1.3% annualized.
- UK RPI: The UK RPI for November is predicted to increase by 0.1% monthly and by 2.0% annualized. Forex traders can compare this to the UK RPI for October, which decreased by 0.2% monthly, and which increased by 2.1% annualized. The UK RPI Excluding Mortgage Interest Payments for November is predicted to increase by 2.1% annualized. Forex traders can compare this to the UK RPI Excluding Mortgage Interest Payments for October, which increased by 2.1% annualized.
- UK House Price Index: The UK House Price Index for October is predicted to increase by 1.1% annualized. Forex traders can compare this to the UK House Price Index for September, which increased by 1.3% annualized.
Here is the key factor to keep in mind today for Japanese Yen trades:
- Japanese Merchandise Trade Balance: The Japanese Merchandise Trade Balance for November was reported at -¥82.1B and the Adjusted Merchandise Trade Balance at -¥60.8B. Economists predicted a figure of -¥355.5B and -¥56.4. Forex traders can compare this to the Merchandise Trade Balance for October, which was reported at ¥15.7B and to the Adjusted Merchandise Trade Balance, which was reported at -¥48.2B. Merchandise Trade Exports for November decreased by 7.9% annualized and Merchandise Trade Imports decreased by 15.7% annualized. Economists predicted a decrease of 8.9% and 12.8% annualized. Forex traders can compare this to Merchandise Trade Exports for October, which decreased by 9.2% annualized and to Merchandise Trade Imports, which decreased by 14.8% annualized.
Should price action for the GBPJPY remain inside the or breakdown below the 143.000 to 144.250 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 143.400
- Take Profit Zone: 137.900 – 139.300
- Stop Loss Level: 144.800
Should price action for the GBPJPY breakout above 144.250 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 144.800
- Take Profit Zone: 146.750 – 147.700
- Stop Loss Level: 144.250
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