When are the UK CPIs and how could they affect GBP/USD?

The UK CPIs Overview

The cost of living in the UK as represented by the consumer price index (CPI) for November is due later on Wednesday at 0930 GMT.

The headline CPI inflation is expected to arrive at +0.2% inter-month in November while the annualized figure is seen a touch lower at 1.4%. The core inflation rate that excludes volatile food and energy items is likely to have steadied at 1.7% YoY 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?

At the time of writing, GBP/USD is seen paring losses on the 1.31 handle, in a bid to extend its recovery from four-day lows of 1.3072 ahead of the UK CPI data release. A below-forecast UK price pressures data could exacerbate the pain in the pound that could see the GBP/USD pair retesting the UK election day low of 1.3052.

“Dismal inflation figures should put the Pound under selling pressure, although given that the market is not much interested in the greenback, the GBP/USD pair will likely post a limited decline. A larger than 0.3% miss from expectations, however, could see the pair plummeting.

Better than expected numbers would be a nice surprise, therefore GBP/USD should recover, probably recovering the 1.3200 threshold. Figures in-line with the market’s expectations should pass unnoticed, with market players turning their attention elsewhere,” FXStreet’s Chief Analyst Valeria Bednarik notes.

Key Notes

German IFO and UK CPI amongst market movers today – Danske Bank

GBP/USD seesaws around four-day low ahead of UK CPI

Forex Today: Brexit redux and trade fears continue to hurt risk appetite, favor dollar

About the UK CPIs

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).