The pound got crushed by inflation
13.01.2015
The GBP/USD pair is trading down today after the publication of statistical data on the UK consumer price index.
In the past few days, the pound was honestly trying to hold in a range of stabilizing after falling in early January. But the statistics are a cruel thing: the market chooses to respond to the data, or leave it unattended. Today in the GBP/USD pair the market chose to react.
Inflation in the UK in December was very weak, to be exact - zero m/m. In annual terms, the CPI is 0.5% against the previous value of 0.7%.
Not to say that the weak inflation came as a surprise to the British economy. But more and more clear signs of deflationary moments create a nervous situation: it is possible that the "iceberg" of problems is bigger than it looks from the shore. The UK did everything carefully and correctly since 2007, when the crisis did not even reach its full scale. Perhaps in 2014 it would be worth it to be more active, but it is not "in the repertoire of" the Bank of England "to run ahead of the steam train."
For a long time (and even now) the investors are kept in tension by the "foggy" monetary policy of the BoE. When and by how much it is planned to raise its key interest rate? Monthly the bank studiously avoids this question as irrelevant, but investors also need to be shown the "horizons." Hence the negativity with respect to the pound, aggravated by the statistics and reactions of the USD.
So far - in the perspective of the first quarter of 2015 - the GBP/USD pair will probably still remain in their original positions. However, any glimpse of the specifics from the Bank of England will give the pound the opportunity to form a clear trading channel.
RoboForex Analytical Department
In the past few days, the pound was honestly trying to hold in a range of stabilizing after falling in early January. But the statistics are a cruel thing: the market chooses to respond to the data, or leave it unattended. Today in the GBP/USD pair the market chose to react.
Inflation in the UK in December was very weak, to be exact - zero m/m. In annual terms, the CPI is 0.5% against the previous value of 0.7%.
Not to say that the weak inflation came as a surprise to the British economy. But more and more clear signs of deflationary moments create a nervous situation: it is possible that the "iceberg" of problems is bigger than it looks from the shore. The UK did everything carefully and correctly since 2007, when the crisis did not even reach its full scale. Perhaps in 2014 it would be worth it to be more active, but it is not "in the repertoire of" the Bank of England "to run ahead of the steam train."
For a long time (and even now) the investors are kept in tension by the "foggy" monetary policy of the BoE. When and by how much it is planned to raise its key interest rate? Monthly the bank studiously avoids this question as irrelevant, but investors also need to be shown the "horizons." Hence the negativity with respect to the pound, aggravated by the statistics and reactions of the USD.
So far - in the perspective of the first quarter of 2015 - the GBP/USD pair will probably still remain in their original positions. However, any glimpse of the specifics from the Bank of England will give the pound the opportunity to form a clear trading channel.
RoboForex Analytical Department
Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.