The UK October CPIs Overview
The cost of living in the UK as represented by the consumer price index (CPI) is due later on Wednesday at 0930 GMT. The headline CPI inflation is expected to accelerate to 0.2% inter-month in October while the annualized figure is seen ticking higher to 2.5%. The core inflation rate that excludes volatile food and energy items is also seen higher at 2.0% last month.
Deviation impact on GBP/USD
Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 80 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 120 pips.
How could it affect GBP/USD?
Upbeat UK CPI figures are likely to offer a fresh lift to the GBP bulls, that could help the rates retest the 1.3036/47 (daily, Nov 13 high), above which the upside targets lie at 1.3081 (Nov 9 high) and 1.3100 (round number).
On a negative surprise, the GBP/USD pair could fall back to the daily pivot at 1.2970 below which floors open up for a test of 1.2954 (5-DMA) and 1.1.2935 (20-DMA).
However, the reaction to the data is likely to be limited, as a judgment on the Brexit deal by UK Cabinet Ministers will remain the exclusive market driver for the pound today.
Key Notes
Pound sees two-way trading in Asia, Eyes on German GDP, Brexit Cabinet meeting, UK CPI
UK CPI rate to hold steady in October - HSBC
Market themes of the Day: Inflation in the UK and in the US headline on Judgement day for Brexit
About the UK CPI
The Consumer Price Index released by the Office for National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).
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