Consumer prices in the UK are expected to rise 1.10% in November
The UK's Office for National Statistics (ONS) will be releasing the monthly inflation report for the nation today. The economists polled expect that UK's consumer prices are likely to rise 1.1% in November. This follows October's slower pace of inflation rate which was recorded at 0.9%. The inflation report coming out today will be an important one as the Bank of England will be meeting later this week on Thursday. A higher than or a match on the estimates on the actual data could potentially keep the BoE to maintain a hawkish stance on interest rates.
Besides the consumer inflation report, the producer prices data will also be released. While the headline consumer inflation is expected to rise 1.10% in November, core CPI which excludes the volatile food and energy prices is expected to rise 1.3% on a year over year basis.
This would push the inflation closer to the BoE's 2% target rate, although still 6 - 7 basis points lower. Still, an increase in the inflation will underpin the uptrend in the inflation which last week according to a survey showed that consumers in the UK expect inflation to continue to rise higher in the coming months.
GBPUSD was bullish in yesterday's trading and the bullish close comes after last Friday's doji which showed exhaustion to the previous three days of declines. This could potentially mean that either price could continue to push higher or we could anticipate a continuation of the decline.
Technical support is seen at 1.2500, while resistance comes at 1.2800. Therefore, GBPUSD is likely to remain range bound within these levels in the near term.
How to trade binary
The U.S. dollar is currently seen weaker but there could be a near term retracement. The British pound has been pushing higher since yesterday and price action could consolidate in the near term. Look for a short term correction 1.2600 on an intraday basis as price looks to test this support level that broken yesterday.
If GBPUSD slips back to the support at 1.2600 we can expect to see a rebound off this support in the near term as the bullish momentum renews.
In light of this, it is best to wait for GBPUSD to slide to 1.2600 support from where daily CALL option can be purchased for a 21:00 GMT expiry time. The bullish momentum should see prices post a reversal near 1.2600 and resume yesterday’s bullish trend.
Target price: 1.2600
Expiry: 21:00 GMT