GBP/USD Bearishness to Continue amid Hint of Improving Inflation in the US Economy

United Kingdom – Consumer Price Index

Today, at GMT 9:30 a.m., the UK’s Office for National Statistics will release the year over year Consumer Price Index (CPI) that measures the changes in the price of goods and services acquired by consumers.

Since the CPI basically measures the inflation level in the economy, this data is considered binary options traders as one of the most important leading indicators of the overall economic health

Last month, the UK’s CPI (y/y) increased by 0.3%, and this month the forecast was set at 0.4%. If the actual comes out higher, it may prompt the Central Bank of UK to turn bullish on the interest rate.

United States – Producer Price Index

Tomorrow, at GMT 1:30 p.m., the US Department of Labor will release the Producer Price Index (PPI) figure, which measures the changes in the price of products and services bought by manufacturers and service providers in the country.

Since the higher cost of production is usually passed on to the consumers, a rise in the producer price index indicates future inflation. Hence, this data is vital for binary option trading as it is used by binary options investors as a leading indicator of the overall US economy.

Last month, the US month-over-month PPI increased by 0.2%, indicating inflationary pressure on the economy and the forecast for this month is set at 0.3% increase.

Trade Recommendation for the GBP/USD

GBPUSDDaily

Since the start of March, the GBP/USD remained fairly bullish and reached as high as 1.4700 level last month. However, over the last few weeks, the GBP/USD has been showing signs of weakness.

Last week, the GBP/USD price broke below the important pivot zone around the 1.4350 level, which confirmed the bearish trend in the market. However, on Friday, the GBP/USD found strong support near the 1.4130 level, which halted the bearish move for now.

As the US producer price index is expected to improve during the last reporting period compared to the previous month, the fundamental outlook for the GBP/USD would likely remain bearish this week. Hence, if the GBP/USD price closes below the immediate support at 1.4130, it would likely to attract additional bearish momentum in the market.

Under the circumstances, it would be recommended that binary options traders consider placing a PUT order for the GBP/USD once the price close below the 1.4130 level this week.

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