When are the UK CPIs and how could they affect GBP/USD?

The UK CPIs Overview

The cost of living in the UK as represented by the Consumer Price Index (CPI) for February month is due early on Wednesday at 07:00 GMT.

The headline CPI inflation is expected to arrive at 1.7% on an annual basis, softer than the previous +1.8%. The core inflation rate that excludes volatile food and energy items is likely to have risen by 1.5% YoY last month compared to the previous rise of 1.6%.

In this regard, analysts at Westpac said that the market expects the February CPI to print at 0.3%; inflation should remain weak indefinitely.

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 80 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 120 pips.

How could it affect GBP/USD?

At the time of writing, GBP/USD holds onto recovery gains near 1.1800. Despite the broad US dollar weakness favoring the pair, investors remain cautious ahead of the UK CPI data release. A below-forecast UK price pressures data can weigh on the pair’s recent recovery while a surprise positive figures could help the pair extend the latest pullback from the multi-year low.

From the technical perspective, 200-HMA near 1.1940 remains on the bull’s radar until the GBP/USD prices maintain the break of the weekly falling trend line, currently at 1.1750. However, the pair’s broad weakness is less likely to be ruled out unless breaking August 2019 low surrounding 1.2020.

Key notes

GBP/USD Price Analysis: Prints session high above 1.18, double bottom on hourly chart

UK inflation preview: How CPI may finally break the pound's prowess

About the UK CPIs

The Consumer Price Index released by the Office for National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).