Will GBP/USD bounce if the UK surprises with higher CPI?

Trading Discussion Currencies
1

UK CPI figures for August due shortly, although traders are still digesting the shock US print from yesterday.

While the surprise to the upside inspired a sharp rally for the US Dollar, the market is already looking for UK inflation to continue higher, and with the BOE anticipating CPI as high 13% in October, there is also an expectation for a more aggressive 75bps rate hike next week. However, this has failed to prevent GBP/USD form trending lower, with the central bank themselves forecasting a recession beginning in Q4.

Will a strong inflation reading from the UK help GBP pare yesterday’s losses against the greenback, or is the pair on track to continue pushing lower?

Check out this article for a deeper insight into GBP/USD and how the market could react:

2

IMO there will be a short time reaction, however sterling is in a downward trend, so expect that would continue.

1 Like
3

That’s an interesting point, and it currently seems like the CPI data is also supporting the downtrend, with the headline print softer-than-expected.

All trading carries risk, but after fairly underwhelming UK economic data earlier in the week as well, the pair could once again look to retest pandemic-era support.