Perhaps all the attention today was the CPI data released from the UK. While many expected that to remain constant at 3.0%, it surprised market participants by expanding 0.1% registering 3.1% on a YoY basis which is the highest ever figure recorded since 2012.
Because of this, and from the way things are set in the UK, Carney now has to write a letter to the Finance minister explaining why inflation is so high and plans of bringing it down. As expected and this is what happens most of the time, high inflation rates will call for tightening and next week will be definitive for GBP bulls.
If there is a hike then it won’t matter, GBP will appreciate especially if we have strong employment and other labor related data. Either way, we remain GBP bulls and every dip is another opportunity to buy now that participants are clear to proceed to the next stage of Brexit negotiations.
In the monthly chart, bulls are in charge and since we have a buy signal we shall only be taking longs in the 4HR chart. Zooming in to the entry chart, we have a strong buy signal turning in from the oversold territory. Matter of fact, there is a double bar reversal pattern to accompany this stochastic buy. So, this is how we going to trade:
Buy: 1.3250
Stop Loss: 1.3175
Take Profit: 1.3480
Have a good trading day

GBPCHF 4HR chart for December 12, 2017

Source: Dalmas FX

GBPCHF Monthly chart for December 12, 2017

Source: Dalmas FX

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