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Sterling Modestly Higher After CPI Data

by on May 20, 2014 10:30 am GMT
 

Sterling is modestly higher against the greenback after data shows that inflation in the United Kingdom picked up more than forecasted, ticking up higher to 1.8 percent versus analyst expectations of 1.7 percent. Core inflation, year-over-year, increased to two percent, moving up .4 percent from the previous month and .2 percent higher than estimates.

The pickup in consumer prices were due to higher transportation costs, such as airfare and fuel costs. According to data from the Office of National Statistics (ONS), food prices were soft. The core consumer price index (CPI), which includes food prices, rose to the strongest level since last September.

After Bank of England (BoE) Governor Mark Carney expressed options to reign in the housing sector, March housing prices increased by eight percent, down from the 9.2 percent in February. Prices in London were an astonishing 17 percent high, yet they were down .8 percent from the previous month.

Cable is trading higher in early London trade, up roughly 12 pips. GBPUSD has rebounded slightly after breaking through the rising trend channel on the daily chart. Traders found support at 1.6780/85, while resistance will likely be found at the former channel support nearing 1.6890 with minor price action resistance just below at 1.6860/65.

Secondary support for GBPUSD can be seen at 1.6730 before testing the 72 EMA.

1D Chart of GBPUSD

1D Chart of GBPUSD