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

The UK July CPIs Overview

The cost of living in the UK as represented by the consumer price index (CPI) is due later on Wednesday at 0830 GMT. The headline CPI inflation is expected to show no growth inter-month in July while the annualized figure is seen accelerating slightly to 2.5%. The core inflation rate that excludes volatile food and energy items is expected to remain steady at 1.9% 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?

An improvement in the UK CPI figures are likely to offer the much-needed respite to the GBP bulls, that could help the rates regain the 1.2750 barrier (5-DMA/ daily pivot), above which the upside targets lie at 1.2800 (round number) and 1.2832 (10-DMA).

On a downside surprise, the GBP/USD pair could breach multi-week lows of 1.2692 below which floors open up for a test of 1.2634 (daily S2/ Fib S3) and 1.2589 (mid-June 2017 lows).

Key Notes

Market themes of the Day: UK inflation and US retail sales headline

UK: Headline CPI likely to edge up to 2.6% y/y - TDS

UK: Key economic events today - Nomura

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).