FX News - May 20 2014: GBP/USD Falls on Mixed UK CPI & PPI Data

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The GBP/USD pair briefly tested the 1.6850 area, but failed to sustain it after the release of the United Kingdom’s mixed CPI and PPI data. The market’s anticipation for these reports helped give a quick boost to the pair, but its lost steam almost immediately when the positive CPI data was countered by the mostly negative PPI data. In April, the UK’s CPI rose by 1.8 per cent over a 12-month period (1.7 per cent expected), while it rose by 0.4 per cent compared to the previous month (0.3 per cent expected). The Core CPI went up by 2.0 per cent, which was higher than the expected 1.8 per cent growth.

On the flipside, however, the country’s PPI data were quite mixed, with its PPI Core Output in April remaining flat compared to the previous month, while the 12-month growth was at 1.0 per cent, as expected. Then there’s the PPI - Input in April, which contracted by 1.1 per cent compared to the previous month, where a drop of only 0.2 per cent was expected.

The GBP/USD pair hovered within a very narrow range between 1.6810 and 1.6820 during the Asian session before climbing sharply and hitting a peak at 1.6857 just prior to the release of the UK data. However, it dropped in less than half an hour, bottoming out at 1.6817. It is currently trading at 1.6829, with initial resistance seen at 1.6830, followed by 1.6872. Meanwhile, initial support is at 1.6789, followed by 1.6747.

As for the USD/JPY, the bearish sentiment among traders continued during today’s European session, which brought down the pair to a low of 101.25. It initially hit a high of 101.60 during the Asian session, but failed to sustain it. It is currently trading at 101.33, with initial resistance seen at 101.55, followed by 101.81. Meanwhile, initial support is at 101.04, followed by 100.79.

By FX Strategy Team, Published on 20th of May 2014
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