Trading Insights: UK core inflation hits fresh highs & GBP strengthens across the board

Market Talk

Commentary: UK core inflation jumps to 7.1% in front of tomorrow's Bank of England interest rate decision

GBPJPY Spotlight

The situation has changed for the Bank of England. Not so long ago, GBP FX traders thought that inflation has peaked and that the BOE will hold off its hiking cycle sooner rather than later.

Today's upside inflation surprise opens the door for the BOE to keep on with its rate hiking cycle.

With that in mind, FX traders could now be forced to rethink their GBP FX positions to reflect the increased chances that the BOE is far from done with slowing down its pace of hiking.

GBP/JPY trading commentary for the very short term (5-13 days)

GBP/JPY has gained a massive 5.5% during the last 5 days, and the pair is now trading above the 180.00s with very short term upside prospects seen near the 183.60s, downside risk below 178.08.

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Today’s economic calendar

UK core inflation jumps to 7.1%

• Expected to report 6.6% vs the previous 6.8%.

Market reaction - GBP strengthens across the board

• *GBPJPY +0.5%
• *GBPAUD +0.49%
• *GBPUSD +0.12%
• *EURGBP -0.16%

*As of 7:08 UTC

Source: TradingView / J. Knobel June 21 2023 6:38 UTC

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Upcoming events

Tomorrow - Thursday, June 22, 2023

• 07:30 UTC Swiss interest rate decision
• 08:00 UTC Norway interest rate decision
• 11:00 UTC Bank of England interest rate decision
• 07:00 UTC Mexico interest rate decision
• Day 2 US Fed Chairman Testimony

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Commentary & insights

UK FTSE 100 Index (UK100) vulnerable toward the downside

Trading Spotlight for UK100 Traders:

• UK100 short sellers could be aiming for the index to fall 300 points toward the 7,228 area
• UK100 buyers could speculate that price will move back above the 7,570 resistance level and open the prospects for an extension toward the 7,740s.