Why Is This Event Important:
BoE Governor Mark Carney may sound increasingly hawkish over the coming months as the central bank head anticipates stronger price growth in the second-half of 2015, and we may see a growing number of Monetary Policy Committee (MPC) officials prepare U.K. households & businesses for higher borrowing-costs as the economy gets on a firmer footing.
However, waning confidence paired with falling input costs may continue
to drag on price growth, and a dismal CPI print may undermine the
near-term breakout in GBP/USD as market participants push back bets for a
BoE rate hike.
How To Trade This Event Risk
Bullish GBP Trade: U.K. Headline & Core Inflation Upticks in May
- Need green, five-minute candle following the release to consider a long British Pound trade.
- If market reaction favors bullish sterling trade, long GBP/USD with two separate position.
- Set stop at the near-by swing low/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.
- Need red, five-minute candle to favor a short GBP/USD trade.
- Implement same setup as the bullish British Pound trade, just in the opposite direction.
GBPUSD Daily
- GBP/USD may continue to retrace the decline from May as it breaks out of the triangle/wedge formation carried over from the previous month, with the pair showing a net 2015-gain for the first time since May 22.
- Interim Resistance: 1.5780 (38.2% retracement) to 1.5814 (May high)
- Interim Support: 1.5400 handle to 1.5420 (78.6% expansion)
| Period | Data Released | Estimate | Actual | Pips Change (1 Hour post event ) | Pips Change (End of Day post event) |
|---|---|---|---|---|---|
| APR 2015 | 05/19/2015 08:30 GMT | 1.0% | 0.8% | -43 | -62 |
