UK CPI could put the bears in control

Yesterday saw cable open up 30 pips higher after BoE Governor Mark Carney suggested that rates could still rise despite the low wage growth. This put GBP/USD above the 1.6700 level and it has stayed there from the overnight session in tight ranges.

UK CPI data is due out today and is expected at a 1.8%, from the previous reading of 1.9%, so the bears will be watching closely and could push it back under 1.67 if this is correct.

Overnight the Kiwi slid lower by 30 pips as inflation expectations dipped to 2.2% from the previous reading of 2.4%. The Treasury has announced that it sees smaller budget surpluses. The Kiwi is currently reading around the 0.8440 level.

USD has kept its recent gains against JPY and is now trading around 102.50 after tensions are easing again in Ukraine for now.

US CPI data is released today and is expected a drop to 0.1% from 0.3%. A rise is expected in the core CPI, which excludes food and energy, and is expected to come in at 0.2% from 0.1%. With mixed reactions, it will be hard to see where the markets take us after the release.

Euro continues to be weak after a selloff in EUR/GBP yesterday from the strong pound, and a weak trade balance reported in the eurozone. The pair is currently trading down about 10 pips at 1.3350. With only the current account out today, it’s in the hands of UK and US data.

EUR/USD

Supports 1.3342 1.3324 1.3296 | Resistance 1.3388 1.3416 1.3434

USD/JPY

Supports 102.37 102.11 101.98 | Resistance 102.75 102.89 103.14

GBP/USD

Supports 1.6710 1.6698 1.6685 | Resistance 1.6735 1.6748 1.6760

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Average spread : 7.469 pips*
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