GBP Consumer Price Index & USD FOMC

13 June, 2017

2017 has not been the best for markets, general insecurity and instability has caused some of world’s major currencies to fluctuate and drop, then falter only to increase in price shortly after. Even safe-haven currencies have made investors and traders uneasy. This effect has been especially observable with the apprehension surrounding the USD, GBP. The pair of currencies could not bolster investor confidence for long periods of time, even though one of the five most traded currency pairs and some of the most preferred base currencies.

This week there are two significant events, the UK CPI (which was announced showing a modest 0.1% increase from the previous month). This in combination with talk of a soft Brexit after the elections resulting in a hung Parliament, has bolstered the Pound against its primary counterparts the USD and EUR on FOREX markets. Of course this could change due to the upcoming interest rate decision on Thursday June 15th.

The USD also has a potentially active upcoming week, with the Fed’s (FOMC’s) economic projections. On top of this significant event, USD traders might want to keep an eye on retail sales for may, CPI ex food and energy, the interest rate decision and of course Fed’s Monetary Policy Statement. You can visit this link to see the week’s other important economic events. At this point predictions seem to be pointing towards a another interest rate increase, largely due to the lowest unemployment rate in 16 years.

The Fed’s are also referencing pro-economic factors such as 9% decrease in mobile phone plans, a slowing of rent inflation and lowered cost of pharmaceuticals. The move to increase interest rate seems to heavily dependent on a tighter labor market – as mentioned above – which hopefully means higher salaries which should ensure higher inflation.

In an ideal scenario – much like the scenario the Federal Central Bank has been expecting since the post Great Recession recovery period of 2008-09. The Fed has managed to miss its forecast made in ’12,’13 and ’14 – although ambitious the Federal Reserve isn’t the most realistic. To further disrupt any investor or trader optimism – the ECB lowered its expected inflation prediction/forecast just last week and foresaw weak prices ahead.

The only way to guarantee we find out the outcome is to watch what is ahead closely, and use MT4 included with all STO accounts. Beyond real time prices, you can also trade anywhere at any time on any of our 7 CFD asset classes with MT4’s webtrader.

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