The UK February CPI overview

The cost of living in the UK as represented by the consumer price index (CPI) is due at 9:30 GMT. The CPI inflation is expected to rebound sharply to 0.5% m/m in February with the annual figure decelerating to 2.8% y/y. The core inflation rate that excludes volatile food and energy items is also expected to tick lower to 2.8% last month.

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 80 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 120 pips.

How could it affect GBP/USD?

According to Jim Langlands at FX Charts, “Cable remains very choppy against the dollar, and I suspect is still best left alone, with too many factors, not least the ongoing Brexit headlines, influencing market moves”.

“From a technical perspective, the charts do hint at the chance of another move to the topside and if correct, look for a run back to 1.4090/4100 above which would allow for 1.4145 and possibly on to 1.4190/00, with major descending trend resistance coming in at 1.4235. On the downside, support will be seen at 1.4000 and again at 1.3965 and 1.3945,” Jim adds.

Key Notes

UK CPI to fall back in February – Capital Economics

European FX Outlook: The UK inflation is set to decelerate in February

About the UK CPI

The Consumer Price Index released by the Office for National Statistics 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).