Article by ForexTime
Sterling flopped to a 5-month low hit hard by the deflation headline of the CPI print. The market gave the pound a clobber in the wake of the unexpected dip in headline CPI to -0.1% year over year in September data, down from 0.0%. The median forecast had been for a repeat of August’s flat reading. Cable shed nearly 0.3% in the wake of the release, and is down by just over 0.8% on the day. It’s been a choppy day so far, as the quid had earlier been showing a 0.4% gain following news that AB InBev, a Belgian-Brazilian brewer, is nearing a completion in its bid to buy the UK’s SABMiller.
While Tuesday’s CPI data gave something for the doves and bears, tomorrow’s release of August-September labor data is likely to give something to the hawks and bulls. Tomorrow’s report will reaffirm a picture of dwindling labor market capacity and consequential perkiness in wage data.
Sterling sliced through the 20-day moving average at 1.5287, which is now seen as resistance on the currency pair. Additional resistance is seen near a downward sloping trend line at 1.5375. Support is seen near the September lows at 1.51. Momentum remains positive but the trajectory of the MACD is turning and is no longer upward sloping.
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