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GBP/JPY binary signal - UK inflation - 17 Oct 2017

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Expiry Time: 
20:00 GMT
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The UK's Office for National Statistics will be publishing the inflation data for the month of September. The inflation report is expected to be released today at 08:30 GMT. According to the economists polled, inflation rate in the UK is expected to rise to 3% in September. This marks a slight acceleration from 2.9% inflation rate seen the month before.

Core inflation rate is also expected to rise at a pace of 2.7%. However, this marks the same pace of increase as in the previous month. The inflation data will have a big impact on the British pound. With inflation now strongly above the Bank of England's 2% inflation target, further increase could mean that the central bank will respond by hiking interest rates. The UK's interest rate currently stands at 0.25%.

The BoE's next meeting comes on November 2nd when it will decide on interest rates. However, the markets are likely to respond first. Thus a 3% inflation rate or higher could mean that the British pound will start to rally. This speculative rally comes as the markets start to build positions in anticipation that the Bank of England will hike interest rates at the November meeting.

However, if inflation slows and falls below last month's 2.9% increase, we could expect the markets to maintain a rather muted response. Still, the prospects of a BoE rate hike remain large with inflation a full 0.9 percentage points above the BoE's inflation target of 2%.

The UK's producer price index data is also expected at the same time. PPI input is expected to slow, rising just 1.2% while PPI output is expected to rise 0.2% on the month. A slowdown in PPI could however signal a cooling off in inflation.

Today's binary options signal is GBPJPY. The currency pair managed to recover above the support level at 148.23. We expect a near term dip to this support followed by a potential rally.

Therefore, we would purchase daily CALL options at 148.23 for 20:00 GMT expiry time as we expect GBPJPY to post a rally towards 150.00 level and close higher on the day.

binary options signal gbpjpy 17 Oct 2017

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.