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19 May 2015
GBP/USD’s 1% decline a response to UK deflation – Scotiabank
FXStreet (Barcelona) - Eric Theoret, CFA, CMT, Currency Strategist at Scotiabank, comments on the price action in GBP/USD after the UK CPI data release, and further gives the technical outlook for the pair.
Key Quotes
“GBP is weak, down 1% and falling in response to softer than expected inflation data with headline CPI breaking to a half-century low in deflationary territory at -0.1% y/y on headline as core softened to a 14-year low of 0.8%.”
“The disappointment has weighed on BoE policy expectations, with the bulk of the OIS adjustment at the longer end beyond the 2Y horizon. The BoE will remain a near term focus as we consider Wednesday’s release of MPC minutes.”
“GBPUSD short-term technicals: bullish-neutral—GBP has broken to a six-session low, falling meaningfully below its 9 day MA (1.5595) while shifting the focus to the 21 day MA at 1.5363. Momentum indicators are still bullish, however they have moderated considerably from last week’s overbought levels.”
Key Quotes
“GBP is weak, down 1% and falling in response to softer than expected inflation data with headline CPI breaking to a half-century low in deflationary territory at -0.1% y/y on headline as core softened to a 14-year low of 0.8%.”
“The disappointment has weighed on BoE policy expectations, with the bulk of the OIS adjustment at the longer end beyond the 2Y horizon. The BoE will remain a near term focus as we consider Wednesday’s release of MPC minutes.”
“GBPUSD short-term technicals: bullish-neutral—GBP has broken to a six-session low, falling meaningfully below its 9 day MA (1.5595) while shifting the focus to the 21 day MA at 1.5363. Momentum indicators are still bullish, however they have moderated considerably from last week’s overbought levels.”