Sterling traders will have to decide whether strong inflation trumps Brexit & political turmoil
The UK CPI data brings the BOE back into the fray but stronger data may not bring a meaningful turnaround in the pound due to all the political noise surrounding Brexit and Theresa May.
First thing’s first and the easy call, a miss or lower price data (-2pp or more) will send the pound lower. If we do see a decent beat the pound will gain but for how long and ow far will be the question. Anything pushing up towards 1.3200 in GBPUSD will likely struggle from around 1.3180. We’ve our old big S&R level at 1.3220/30 too so anything up to there, I’d happily sell into. Conversely, 1.3060 is the level to watch should the numbers miss.
If the numbers are good then we’ll have to see whether traders jump on those and push politics to one side. I’m very doubtful that will happen, especially with the Brexit Bill being voted on today in Parliament.
Stand by your beds folks.