Trading Forex and CFDs is risky

UK CPI unchanged but it’s all about Brexit

Market Analysis
2016-06-14_12-10-42

GBPUSD, Daily        

UK May CPI remained unchanged at 0.3% y/y, below the median for 0.4% y/y. Rising transport costs and restaurant bills were principal upward drivers. Core CPI also came in unchanged, at 1.2% y/y. The data fits BoE projections, which is also expecting prices to rise markedly in the second half of the year on the back of rising energy prices, though the central bank still thinks CPI will remain below 2% at its two-year forecasting horizon. The wildcard will be if the UK votes to leave the EU, which would more than likely trigger a sharp drop in sterling (most think to around 1.20 versus the dollar) and which would in turn drive inflation well above BoE forecasts. As was the case in the 2008-2014 period, when CPI remain above the 2% target, the BoE would like ignore a post-Brexit spike in inflation.

The UK PPI data that was released at the same time was a little stronger than expected, however, sterling continues to trade lower.  1.4050 marks the April low and 1.3850 the 2016 low with Brexit woes continuing to dominate sentiment.

 

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! The next webinar will start in:

Stuart Cowell

Market Analyst 

HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.