April CPI y/y: 3.0%
Official release (PDF)
Recent GBP-weakness has to do with the Bank of England putting QE and basically the idea of monetary stimulus back on the table. This was not a viable option when the inflation rate was above the target of 2.0%. However as Mervyn King mentioned in the latest dovish BoE Inflation report, inflation is slowing. This data confirms that, and with commodity prices continuing to fall in May, we can expect the trend to continue downwards.
The latest release of CPI data for April showed that the year-on-year rate cooled to 3.0%, after a 3.5% reading in March. This has cooled considerably since the 5.2% in Oct. 2011. This now gives more leeway for the BoE to operate, as the inflation trend is down even though it is not at the 2.0% target yet.
The GBP/USD is seen breaking below narrow consolidation range and remains bearish while other USD-crosses are showing more a consolidation/corrective stance.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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