Inflation data out of the UK surprised to the upside, with the CPI nearing the Bank of England’s inflation target. This supports other economic reports, which have shown a stronger-than-expected economy. It will also keep the Bank of England from cutting interest rates, providing a long-term catalyst to the British Pound. The GBPUSD has moved above a key horizontal support area, where will price action move to next? Today’s fundamental analysis will take a look at price action in both directions.
Forex traders now await key housing data, followed by the January PPI report. Inflation remains subdued in the US and a challenge for the Fed. Late in today’s trading sessions, minutes from the last FOMC meeting will be published, expected to move the US Dollar. Any hint in a change of its current monetary policy is likely to crush the greenback. Will bulls receive the catalyst to accelerate to the upside, or will bears take over? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Key Fundamental Factors for the GBPUSD
Here are the key factors to keep in mind today for British Pound trades:
UK CPI: The UK CPI for January decreased by 0.3% monthly and increased by 1.8% annualized. Economists predicted a decrease of 0.4% and an increase of 1.6%. Forex traders can compare this to the UK CPI for December, which was reported flat at 0.0% monthly, and which increased by 1.3% annualized. The Core CPI for January increased by 1.6% annualized and the CPI Including Housing Costs increased by 1.8% annualized. Economists predicted an increase of 1.5% and 1.7%. Forex traders can compare this to Core CPI for December, which increased by 1.4% annualized and to the CPI Including Housing Costs, which increased by 1.4% annualized.
UK PPI: The UK PPI Input for January increased by 0.9% monthly and by 1.9% annualized. Economists predicted a decrease of 0.4% and 0.1%. Forex traders can compare this to the UK PPI Input for December, which increased by 0.9% monthly and by 0.9% annualized. The UK PPI Output for January increased by 0.3% monthly and by 1.1% annualized. Economists predicted an increase of 0.1% and 1.0%. Forex traders can compare this to the UK PPI Output for December, which was reported flat at 0.0% monthly, and which increased by 0.9% annualized. The UK PPI Core Output for January increased by 0.1% monthly and by 0.7% annualized. Economists predicted an increase of 0.1% and 0.8%. Forex traders can compare this to the UK PPI Core Output for December, which decreased by 0.1% monthly, and which increased by 0.9% annualized.
UK RPI: The UK RPI for January decreased by 0.4% monthly and increased by 2.7% annualized. Economists predicted a decrease of 0.6% and an increase of 2.6%. Forex traders can compare this to the UK RPI for December, which increased by 0.3% monthly and by 2.2% annualized. The UK RPI Excluding Mortgage Interest Payments for January increased by 2.8% annualized. Economists predicted an increase of 2.6%. Forex traders can compare this to the UK RPI Excluding Mortgage Interest Payments for December, which increased by 2.2% annualized.
UK House Price Index: The UK House Price Index for December increased by 2.2% annualized. Economists predicted an increase of 2.4%. Forex traders can compare this to the UK House Price Index for November, which increased by 1.7% annualized.
Here are the key factors to keep in mind today for US Dollar trades:
US Housing Starts and Building Permits: US Housing Starts for January are predicted to decrease by 12.0% monthly to 1,415K starts, and Building Permits are predicted to increase by2.1% monthly to 1,450K permits. Forex traders can compare this to US Housing Starts for December, which increased by 16.9% monthly to 1,608K starts and to Building Permits, which decreased by 3.9% monthly to 1,416K permits.
US PPI: The US PPI for January is predicted to increase by 0.1% monthly and by 1.6% annualized. Forex traders can compare this to the US PPI for December, which increased by 0.1% monthly and by 1.3% annualized. The US Core PPI for January is predicted to increase by 0.2% monthly and by 1.3% annualized. Forex traders can compare this to the US Core PPI for December, which increased by 0.1% monthly and by 1.1% annualized. The US Core PPI ex Trade for January is predicted to increase by 0.1% monthly and by 1.3% annualized. Forex traders can compare this to the US Core PPI ex Trade for December, which increased by 0.1% monthly and by 1.5% annualized.
FOMC Minutes: The US Federal Reserve will release minutes from its last meeting today and forex traders will look for any potential change in the wording used, which could give insight to future monetary policy adjustments.
Should price action for the GBPUSD remain inside the or breakout above the 1.2970 to 1.3050 zone the following trade set-up is recommended:
Timeframe: D1
Recommendation: Long Position
Entry Level: Long Position @ 1.3000
Take Profit Zone: 1.3335 – 1.3420
Stop Loss Level: 1.2945
Should price action for the GBPUSD breakdown below 1.2970 the following trade set-up is recommended:
Timeframe: D1
Recommendation: Short Position
Entry Level: Short Position @ 1.2945
Take Profit Zone: 1.2765 – 1.2825
Stop Loss Level: 1.2970
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