When are the UK CPIs and how could they affect GBP/USD?

The UK Dec CPI Overview

The UK docket has the CPI report, which will be published later this session at 0930GMT. The consumer prices in the British economy are expected to ease slightly to 3.0% in Dec y/y. While core figures, excluding volatile food and fuel costs, are also expected to decelerate to 2.6% in the reported month.

On monthly basis, the consumer prices are expected to arrive at 0.4%, when compared to 0.3% seen in the month of November. 

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 60 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 75 pips.

 How could affect GBP/USD?

On a positive surprise, we could see Cable retesting 1.3820/36 (multi-month tops/ Fed 2016 low), beyond which 1.3850 resistance area (psychological levels) could be tested, opening doors towards the natural resistance at 1.3900.

Conversely, a bigger-than-expected drop in the headline CPI figures will cause GBP/USD pair to extend the downslide towards 1.3779/81 (NY low/ daily pivot), below which a test of 1.3717 (5-DMA) will be imminent.

Key notes

UK: Key economic events ahead – Nomura

UK CPI: Headline and core inflation to edge down - Barclays

Main market movers today - Danske Bank

About the UK CPI

The Consumer Price Index released by the Office for National Statistics (ONS) is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).