Binary Options Analysis – Trade of the Week: GBP/USD – July 14, 2015

United Kingdom – Consumer Price Index

Today, at GMT 8:30 a.m., the UK’s Office for National Statistics will release the year-over-year consumer price index (CPI), which measures the changes in the products and services bought by British consumers over the past 12 months. Although this data is calculated on a monthly basis, it is represented in a year-over-year format.

The consumer price index is used by the Bank of England (BOE) as the primary tool to gauge consumer inflation in the country. Since UK’s consumer sector makes up a large portion of the economy, a rising price level would prompt the BOE to hike rates. Hence, binary options traders pay close attention to the CPI (y/y) readings.

In June, the UK’s CPI increased by 0.1% and the forecast for July is currently set at a rather pessimistic 0.0% increase in the CPI.

United States – Retail Sales

Later in the afternoon, at GMT 12:30 p.m., the US Census Bureau will release the month-over-month retail sales figure, which measures the changes in the net value of sales made at by the retail sector in the US, over the past month.

Binary options investors consider the retail sales figure to be an important leading indicator of the US economy, as it is highly correlated with consumer spending. Since consumer spending makes up a large portion of the US GDP, the retail sales data can indicate the state of the overall economy in the United States.

Last month, the US retail sales (m/m) increased by 1.2% and the forecast for July is currently set at a modest growth around 0.2%.

Trade Recommendation for the GBP/USD

GBPUSDDaily

Since forming an Inside Bar (IB) on June 18, the GBP/USD price retraced back towards the uptrend line over the last two weeks. After reaching the uptrend line on July 8, the GBP/USD once again formed another inside bar and the price bounced upwards.

Yesterday, the GBP/USD price reached near the psychological pivot zone around 1.5600, but the price was rejected. As a result, the GBP/USD formed a bearish pin bar.

Earlier today, during the Asian session, the GBP/USD price penetrated below yesterday’s low at 1.5476, signaling additional bearishness over the next few days.

Under the circumstances, it is recommended that traders place a PUT order with their binary options brokers for the GBP/USD at current market price, as the outlook for this pair would remain bearish as long as the price trades below the 1.5600 level.

Recommended Broker: Cherry Trade

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