UUKK iin­nf­fllaat­ti­ioonn rreeaad­di­in­ngg wweeaak­keerr tth­haann eexxppeec­ct­teedd

Financial Mirror (Cyprus) - - FRONT PAGE -

The UK In­fla­tion read­ing is much weaker than ex­pected, and pro­vides some va­lid­ity be­hind why BoE Gover­nor Mark Car­ney re­peated some cau­tious views over the UK econ­omy last week.

Most will link the low price of oil and decline in in­fla­tion to­gether, but the un­ex­pected and con­tin­ued weak core in­fla­tion read­ing pin­points that UK in­fla­tion woes stretch much of oil.

This will not only fur­ther push back any faint ex­pec­ta­tions for a UK in­ter­est rate rise any­time soon, but it will also strengthen the BoE’s well-known and con­tin­u­ously dovish views on UK i nfla­tion.

Can we ex­pect the GBPUSD to con­tinue to fall? Not re­ally, and you could sug­gest that traders priced this news in early fol­low­ing the pair slip­ping from 1.58 at the be­gin­ning of the week.

When the GBPUSD closed above 1.55 a fort­night ago, it set a new up­per trad­ing range and it would need to close be­fore 1.55 be­fore traders could ex­pect any

fur­ther than the decline

in the price ad­di­tional bear­ish mo­men­tum.

If you’re pes­simistic about the US econ­omy and ex­pect­ing a dovish FOMC Min­utes on Wed­nes­day, then we could see the pair bounce back later this week.

Mar­kets Re­port

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