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Forex Today: GBP bulls take a breather ahead of Carney, UK CPI

A sense of calm prevailed in Wednesday’s Asian trading, as the dust settled over the Brexit vote defeat aftermath. The GBP bulls faced exhaustion, leaving the Cable to consolidate the Brexit vote rejection-led rally near 1.2850 levels. The EUR/USD pair also steadied just ahead of the 1.14 handle while the Yen traded on the front foot amid moderate risk-aversion.

The USD/JPY pair got sold-off once again at 108.75, having found some support near 108.50 region amid reports that the BoJ will slash inflation forecasts at its monetary policy meeting next week. Meanwhile, the Antipodeans remained underpinned by further Chinese stimulus plans. The Aussie regained the 0.72 handle and the NZD/USD pair tested higher near 0.6830 heading into Asia’s closing.

Among related markets, both crude benchmarks traded modestly higher while gold futures kept the bid tone intact above 1290 levels. The Asian stocks, on the other hand, traded mixed amid Brexit anxiety and China stimulus talks.

Main Topics in Asia

GBP rallies on Brexit vote, sentiment switches soft

Scotland’s Sturgeon: We cannot waste any more time for a second referendum

UK consumer spending fell by the most in 8 months in December - Visa

China injects record CNY 560 billion via reverse repo operations

China Commerce Ministry: Will further boost consumption this year

Japan’s Suga: Will closely watch movements related to Brexit

Oil continues higher on expectations of China easing, receding US stocks

'Gold'en crossover confirmed, China stimulus plans and Brexit uncertainty could limit downside

Moody's would formally review UK's credit profile in case of no-deal Brexit

Asian stocks trade mixed, Yen gains

Sources: BoJ said to cut inflation outlook next week – Reports

Key Focus Ahead

The EUR, GBP traders brace for yet another eventful session ahead, with the UK December CPI and PPI figures dropping in at 0930 GMT. The headline CPI figure is likely to ease 2.1% in Dec versus 2.3% while the core reading is seen steady at 1.8% y/y in the reported month. Just ahead of the UK inflation report, the Bank of England (BOE) Governor Carney’s testimony on the Financial Stability Report (FSR) will be closely eyed at 0915 GMT. Apart from these two event risks, the second-liner German final CPI data will be published at 0700 GMT.

In the NA session, the UK PM Theresa May’s leadership challenge will headline (scheduled at 1900 GMT) amidst minority housing sector and EIA crude stockpiles data from the US. Also, in focus remains the Fed Beige book release at 1900 GMT alongside PM May’s no-confidence vote.

EUR/USD: downside exposed after bearish outside-day

The path of least resistance in the EUR/USD pair is to the downside. The bearish setup would be negated above the previous day's high of 1.1490.

GBP/USD once again trading near 1.2850 ahead of UK CPI, BoE's Carney

With the long-awaited parliamentary vote finally out of the way, traders will be looking towards an appearance from the Bank of England's Mark Carney at 09:15 GMT today, closely followed by the most notable CPI for December, with the y/y headline figure expected to slip from 2.3% to 2.1%.

May's Brexit deal goes down in flames and the EU is singed

Prime Minister Theresa May lost her bid to bring the ill-fated Brexit deal through the House of Commons by a huge majority of 230 votes.

 

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