Source: PaxForex Premium Analytics Portal, Fundamental Insight

The UK CPI for May is predicted to increase 0.6% monthly and 9.1% annualized. Forex traders can compare this to the UK CPI for April, which rose 2.5% monthly and 9.0% annualized. The Core CPI for May is predicted to expand 0.6% monthly and 6.0% annualized. Forex traders can compare this to Core CPI for April, which increased 0.7% monthly and 6.2% annualized.

The UK PPI Input for May is predicted to increase 1.9% monthly and 19.4% annualized. Forex traders can compare this to the UK PPI Input for April, which rose 1.1% monthly and 18.6% annualized. The UK PPI Output for May is predicted to expand 1.5% monthly and 14.7% annualized. Forex traders can compare this to the UK PPI Output for April, which increased 2.3% monthly and 14.0% annualized.

The UK RPI for May is predicted to rise 0.5% monthly and 11.4% annualized. Forex traders can compare this to the UK RPI for April, which rose 3.4% monthly, and 11.1% annualized.

The South African CPI for May is predicted to increase 0.3% monthly and 6.2% annualized. Forex traders can compare this to the South African CPI for April, which rose 0.6% monthly and 5.9% annualized. The Core CPI for May is predicted to expand 0.4% monthly and 4.0% annualized. Forex traders can compare this to Core CPI for April, which increased 0.4% monthly and 3.9% annualized.

Inflation remains the driving force in the Forex market, and investors await British, Canadian, and South African data. Minutes from the last Reserve Bank of India meeting may move the Rupee, while US mortgage data will receive additional attention as borrowing costs rise. Many would-be US homeowners cannot afford sky-high prices, and the increase in mortgage rates threatens default for the bottom 20% of borrowers. Stagflation continues to rear its head, causing more economists to realize the threat, except for central banks, who lost credibility, especially the US Fed. Since the Bank of England is the only G7 central bank that acknowledged the threat in May, the British Pound has notably more upside potential than other currencies, which will catch up to reality over the following months.

The forecast for the GBP/ZAR remains bullish as this currency pair found support inside its stabilizing Ichimoku Kinko Hyo Cloud. Volatility may increase as the ascending Tenkan-sen has crossed above its descending Kijun-sen. Traders should also monitor the CCI, which remains in positive territory and has more upside potential until it moves into extreme overbought conditions. Can bulls extend recent gains and push the GBP/ZAR into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.

Should price action for the GBP/ZAR remain inside the or breakout above the 19.3920 to 19.7020 zone, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Long Position
• Entry Level: Long Position @ 19.5450
• Take Profit Zone: 20.2565 – 20.5015
• Stop Loss Level: 19.1425

Should price action for the GBP/ZAR breakdown below 19.3920, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Short Position
• Entry Level: Short Position @ 19.1425
• Take Profit Zone: 18.7480 – 18.9725
• Stop Loss Level: 19.3920

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