After the GBPUSD slid to new multi-month lows due to the rise in Brexit tensions which elevated the chances of a no-deal Brexit, forex traders will get key inflation data this morning. The Bank of England has reminded markets that their mandate is not Brexit, and with inflationary pressures on the rise they would raise interest rates. While many analysts believe this to be an unlikely outcome, the risk for a more hawkish central bank persists. Will today’s inflation data inspire a short-covering rally in the GBPUSD? Follow the PaxForex Daily Fundamental Analysis and take the profitable side of this currency pair!
Here are the key factors to keep in mind today for British Pound trades:
- UK CPI: The UK CPI for June is predicted flat at 0.0% monthly and to increase by 2.0% annualized. Forex traders can compare this to the UK CPI for May which increased by 0.3% monthly and by 2.0% annualized. The Core CPI for June is predicted to increase by 1.8% annualized and the CPI Including Housing Costs is predicted to increase by 1.9% annualized. Forex traders can compare this to Core CPI for May which increased by 1.7% annualized and to the CPI Including Housing Costs which increased by 1.9% annualized.
- UK PPI: The UK PPI Input for June is predicted to decrease by 0.5% monthly and to increase by 0.3% annualized. Forex traders can compare this to the UK PPI Input for May which was reported flat 0.0% monthly and which increased by 1.3% annualized. The UK PPI Output for June is predicted to increase by 0.1% monthly and by 1.7% annualized. Forex traders can compare this to the UK PPI Output for May which increased by 0.3% monthly and by 1.8% annualized. The UK PPI Core Output for June is predicted to increase by 0.1% monthly and by 1.7% annualized. Forex traders can compare this to the UK PPI Core Output for May which increased by 0.1% monthly and by 2.0% annualized.
- UK RPI: The UK RPI for June is predicted to increase by 0.1% monthly and by 2.9% annualized. Forex traders can compare this to the UK RPI for May which increased by 0.3% monthly and by 3.0% annualized. The UK RPI Excluding Mortgage Interest Payments for June is predicted to increase by 2.9% annualized. Forex traders can compare this to the UK RPI Excluding Mortgage Interest Payments for May which increased by 3.0% annualized.
- UK House Price Index: The UK House Price Index for May is predicted to increase by 1.3% annualized. Forex traders can compare this to the UK House Price Index for April which increased by 1.4% annualized.
Forex traders will get housing data and the key Federal Reserve Beige Book which is expected to move the US Dollar. Yesterday’s stronger than expected retail sales report resulted in a rally, but will this evening’s Beige Book force a resumption of the downtrend in the US Dollar or can the rally be extended? Today’s fundamental analysis will take at the upside potential in the GBPUSD as well as the downside risk.
Here are the key factors to keep in mind today for US Dollar trades:
- US Housing Starts and Building Permits: US Housing Starts for June are predicted to decrease by 0.7% monthly at 1,260K starts and Building Permits are predicted to increase by 0.1% monthly to 1,300K permits. Forex traders can compare this to US Housing Starts for May which decreased by 0.9% monthly to 1,269K starts and to Building Permits which increased by 0.3% monthly to 1,294K permits.
- US Federal Reserve Beige Book: Forex traders will look forward to this report which covers all twelve Federal Reserve districts and consists of current economic conditions and challenges. Forex traders will likely get another important data point in order to assess how close a cut in interest rates may be. Volatility in the US Dollar is expected to increase as forex traders sort through the details of the Beige Book.
Should price action for the GBPUSD remain inside the or breakout above the 1.2375 to 1.2460 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.2415
- Take Profit Zone: 1.2735 – 1.2780
- Stop Loss Level: 1.2360
Should price action for the GBPUSD breakdown below 1.2375 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.2360
- Take Profit Zone: 1.2155 – 1.2220
- Stop Loss Level: 1.2400
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