TheNews

Trading the News: U.K. Consumer Price Index (CPI)

The U.K.’s Consumer Price Index (CPI) may spark a limited reaction as the headline is projected to hold steady at an annualized 2.3%, but a downtick in the core rate of inflation may weigh on GBP/USD as it encourages the Bank of England (BoE) to preserve a wait-and-see approach for monetary policy.

What’s Expected:



Why Is This Event Important:

Despite the 8 to 1 split in March, the majority of the Monetary Policy Committee (MPC) may try to buy more time as the U.K. officially starts its departure from the European Union (EU), and Governor Mark Carney may continue to tame interest-rate expectations as officials reiterate ‘monetary policy can respond, in either direction.’ However, another stronger-than-expected CPI print may push the BoE to change its tune as the central bank pledges ‘there are limits to the extent that above-target inflation can be tolerated,’ and the committee may show a greater willingness to move away from its easing-cycle as official warn ‘some modest withdrawal of monetary stimulus over the course of the forecast period remains appropriate.’

How To Trade This Event Risk
Bearish GBP Trade: Core U.K. Inflation Narrows in March

• Need a red, five-minute candle following the release to consider a short GBP/USD entry.
• If the market reaction favors a short British Pound trade, sell GBP/USD with two separate position.
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit, set reasonable limit.

Bullish GBP Trade: U.K. CPI Report Continues to Top Market Projections

• Need green, five-minute candle to favor a long GBP/USD trade.
• Implement same setup as the bearish British Pound trade, just in the opposite direction.

Potential Price Targets For The Release
GBP/USD Daily



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