British pound wavers ahead of the BOE rates decision
The euro declined slightly after Eurostat released the bloc’s inflation data. According to the office, the headline consumer price index (CPI) data showed that prices declined by 0.1% in May, after rising by 0.3% in April. The prices rose by 0.1% on a year-on-year basis. The core CPI, which removes the volatile food and energy services, rose by 0.9% in May. Estonia, Luxembourg, and Cyprus had the least inflation rate at -1.8%, -1.6%, and -1.4% respectively. On the other hand, Poland, The Czech Republic, and Hungary had the highest annual inflation rate. Also, auto registration data showed that there was some growth. For example, auto registrations increased by 39.1% after falling by 43.8%.
The British pound was little changed today as the Bank of England (BOE) started its two-day meeting. In its decision tomorrow, most analysts expect that the bank will leave the interest rates unchanged and possibly add more money in its quantitative easing program. The BOE came under pressure after the ONS released weak inflation data from the UK. The numbers showed that the headline consumer price index declined from the previous 0.8% to 0.5%. The core CPI dropped from 1.4% to 1.2%. At the same time, the retail price index rose by 1.0% from the previous 1.5%.
The Canadian dollar was little changed after the statistics office released the country’s inflation data. According to Statistics Canada, the headline CPI declined by 0.4% in May. It rose by 0.7% on a year on year basis. In the same month, core CPI rose by 0.7% on a year on year basis. This means that the country’s inflation is below the BOC’s target of 2%. The Canadian dollar was also affected by lower crude oil prices after the American Petroleum Institute (API) showed that inventories in the US rose by more than 3 million barrels.
The EUR/USD pair declined to an intraday low of 1.1225, which is along with the important 23.6% Fibonacci retracement level. Also, the price is below the 14-day and 28-day exponential moving average. It is also forming a head and shoulders pattern whose neckline is at 1.1211. Therefore, a move below this support will see the price continue to fall as bears start targeting the 38.2% retracement level at 1.1120.
The USD/CAD pair is trading at 1.3528, which is a few pips above this week’s low of 1.3500. On the four-hour chart, the pair has formed a small head and shoulders pattern and is also between the 50-day and 100-day exponential moving averages. The RSI has also declined, from this week’s high of 78 to the current 47.95. This means that the price may continue falling as bears attempt to move below the 1.3500 support.
The FTSE 100 index rose to an intraday high of £6,284. On the daily chart, the price also managed to cross the 100-day exponential moving average. It is also above the 50-day EMA. Also, the price is along with the 50% Fibonacci retracement level while the Average True Range (ATR) is close to its lowest level since February this year. The price may continue rising as bulls target the important resistance at £6,500.