Fed Chair Jerome Powell’s comments on the Jackson Hole Symposium resulted in the worst weekly candle in US500 since June.
Pound Can Outperform the Market
What is happening?
Great Britain's office for national statistics will release CPI data on January 19, 09:00 GMT+2. This is considered the UK's most important inflation data because it's the central bank's inflation target. In addition, over the last several months, investors highlighted inflation as the key measure of economic recovery. Thus, this particular reading is one of the most anticipated January events in the British economy.
Pound against other currencies
Researchers at Barclays describe the British Pound's recent performance as "resilient" as they anticipate the currency to continue outperforming key peers over the coming weeks and months. The pound was the best performing G10 currency in the first week of 2022, helped by a positioning unwind and expectations for a February interest rate hike. The market now anticipates a 75% chance of a second rate hike coming from the Bank of England at the February policy meeting, odds of which have in turn been boosted by expectations for a more hawkish US Federal Reserve in 2022.
The last readings created a vast bullish movement in GBP/USD pair. However, shortly the pair returned to 1.320.
How to trade on Britain's CPI readings?
Higher-than-expected inflation boosts the chances for a rate hike. Thus, creating an uptrend movement in GBP against other currencies.
- If the actual number is higher than expected – GBP will rise.
- Otherwise – GBP may slide against USD and EUR.
Check the economic calendar
Instruments to trade: GBP/USD, GBP/CAD, EUR/GBP.
Last week several important economic updates influenced the Forex market. US preliminary GDP fell less than expected (0.6% actual vs. 0.7% forecast). Below you will find the key events to trade on during the week from August 29 to September 2.
The United States will publish the Inflation Rate and Core Inflation Rate, also known as US CPI and Core CPI, on August 10 at 15:30 GMT+3.
Main news that will drive the market in the upcoming week include CB Consumer Confidence Index, Canadian GDP, and US Core PCE Price Index
The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.
Every week we expect many interesting events that can shake the market.