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GBP/USD trading - US retail sales - 15 Feb 2017

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GBP/USD trading chart 15 Feb 2017
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Yesterday, the UK published a surprisingly weak data

In January the Core CPI showed 1.6% vs. the forecast of 1.7%. The CPI rose from 1.6% to 1.8% - a good gain in a month, but the forecast was 1.9%. The RPI rose from 2.5% to 2.6%, but on a monthly basis fell by 0.6% and the annual index was expected to reach 2.8%. The PPI output increased by 0.6%.

The US data pleased investors yesterday

The US producer price index (PPI) grew by 0.6% in January, against the expectation of 0.3%. The Core PPI added 0.4% vs. 0.2%. The NFIB small business optimism index increased from 105.8 to 105.9 against the expectation of decline to 105.1. But the main event of the day was the speech of Janet Yellen in the Senate, where she stated that in the case of continuation of employment growth and inflation, the Fed will also adhere the speed of rate increase. And according to the Federal Reserve, the average growth of new jobs is 190K. In January 227K new jobs were created. So, investors consider an average of 2.5 rate hike this year. So the possibility of the March increase is around 18% now and the June increase is nearly 100%.

Today the UK is to publish data on the labor market. The unemployment rate is expected unchanged 4.8%, the number of unemployed could rise by 1.1K, but the average earnings index is projected at 2.8%.

In January the retail sales are expected to increase by 0.1% after rising 0.6% in December. The Core retails sales are projected at 0.4%. At the same time, the consumer price index is expected to increase by 0.3%. The industrial production is expected to grow by 0.1% with an increase in capacity utilization rate from 75.5% to 75.6%.

How we trade binary

The bulls are trying to hold above 1.2457, however, we recommend to buy Call options from this level only after the formation of the false breakdown. The purpose of the return will be 1.2502 and 1.2547. We would buy Put options if the pair GBP/USD will fix below 1.2457. In the case of growth of the pound in the area of 1.2502 in the first half of the day, you can also see the possibility to buy Put options in the event of unsuccessful fixing above 1.2502.

We would buy Call options if the pair rises above 1.2463 with the target at 1.2502. This scenario would be invalidated if the pair goes below 1.2457, in which case we would go for PUT option with the end of the expiry.

Asset: GBP/USD

Direction: CALL

Target price: 1.2463
Expiry time: 21:00 GMT

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. He has no business nor personal relationships with any mentioned government entities or stocks. 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.

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