The UK CPIs Overview
living standard in the UK as represented by the Consumer Price Index (CPI) for November month is due early on Wednesday at 08:00 GMT. UK inflation data will join the current Brexit nature, the coronavirus (COVID-19) vaccine headlines and the US covid stimulus updates to favor the GBP/USD traders. The price economics gain more significant ahead of Thursday’s Bank of England meeting.
The headline CPI inflation is hope to ease from 0.7% prior to 0.6% on an annual basis. The Core CPI that not include volatile food, and energy items is also likely to far from 1.5% to 1.4% YoY. Telling about the monthly figures, the CPI bears the upbeat consensus of +0.1% versus +0.0% prior.
In this regard, analysts at TD Securities said,
For CPI, we look for the headline to slip lower to 0.6% y/y (market forecast 0.6%), and for core CPI to slip to 1.4% y/y (expected 1.4%). Details from the preliminary Eurozone prints reveal services prices bounce back a bit, when goods prices were weaker, possibly linked to Black Tuesday discounting, and we see for a similar pattern in the UK.
How will impact GBP/USD?
By the press time of pre-London open on Wednesday, GBP/USD glad the broad US dollar index weakness, coupled with the optimistic of a UK-EU trade deal by this weekend, to make rounds to the mid-1.3500s.
While UK PM Boris Johnson has repeatedly shown the readiness to handling the burden of no-deal Brexit, the European policymakers have recently talked positively about the development. Though, rumors over Canada-style or Australia-style Brexit deal keep weighing the mood. Also effort the sentiment could be the market’s cautious sentiment ahead of the final decision as well as the wait to arrive for the US stimulus and Fed decision.
can today’s UK CPI manage to beat the market agreement on a positive side, the BOE will have a chance to refuse the odds of negative rates, which in turn can offer raw strength to GBP/USD. However, closness to the UK PMIs for December and the risk events are likely to term the CPI-led cable moves as a knee-jerk reaction.