GBP/USD Likely to Resume Downtrend Despite Improving Inflation in the UK

United Kingdom – Consumer Price Index

Today, at GMT 9:30 a.m., the UK’s Office for National Statistics released 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 US binary options investors 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%. However, the actual figure came out slightly better than what the market was expecting, at 0.5%.

United States – Building Permits

Later, at GMT 1:30 p.m., the US Census Bureau released the Building Permits figure, which is an annualized number of new building permits for the residential housing sector issued during the last month.

Since getting a building permit usually indicate future construction work, and construction work usually increases the demand for products and services in the local area, binary options traders consider this data to be a leading indicator of the overall economic activity in the country.

Last month, 1.14 million building permits were issued and this month, analysts were expecting the figure to come out around 1.15 million. The actual figure came out exactly at 1.15 million.

Trade Recommendation for the GBP/USD

GBPUSDDaily

After falling around 2,200 pips since the Brexit, the GBP/USD finally found sustainable support around the 1.2800 level on July 6. Since then, the GBP/USD has retraced around 675 pips and found resistance around the 1.3475 level. However, after forming a double top formation on the daily chart, the pair seems to be resuming the downtrend at the moment.

As the UK’s CPI figure improved over the last month, it would likely set a bullish fundamental outlook for the GBP/USD. However, as the downtrend in June was a very strong one, a minor improvement in inflation may not be enough for the British Pound to turn the table this week.

The GBP/USD is now trading near last week’s short-term pivot zone around 1.3100, if the pair closes below this level, it would certainly have the potential to go further south from here.

Under the circumstances, it would be recommended that binary options traders consider placing a PUT order for the GBP/USD with their binary options brokers as soon as the price and closes below the 1.3100 level on the daily chart.

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