This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
GBP/USD below 50-DMA
At 9.30am (London time) we will see the latest UK inflation figures with the release of the consumer price index and the retail price index. Having seen the CPI come in at 1% last month, Bank of England governor Mark Carney will have already prepped his letter to the chancellor George Osborne. The expectations are for a figure of 0.7% figure, and as it is more than 1% away from the targeted 2% it will require a letter of explanation.
With both ASDA and Tesco announcing renewed price cuts and the collapse of oil, this will come as no real surprise to market watchers.
As GBP/USD sits below $1.52 it still remains below the 50-day moving average by some 400 pips, and the divergence from the 200-DMA is now 1,150 pips. The relative strength index confirms that GBP/USD is still oversold but there have been precious few triggers to warrant a change in sentiment. It is unlikely today’s UK inflation figures will change that trend.