Daily Market Insight for the 11th May 2023 - GBP in Focus with BOE rate decision due today

are there Chinese this is Brad Gilbert with the daily Market insight for Thursday the 11th of May right just a bit of a recap on the uh us CPI numbers now the call numbers these are the ones the market is or has been reacting to quite closely came out right on expectations now you wouldn't usually expect to move but the CPI number itself right uh excluding um energy and food came in at 4.9 right a Lower Print I think just the fact it was below five percent got the market very excited and we did see a little bit of a spike across the board on the dollar right Sterling jumped up 70 Aussie about 70 kiwi 50 uh even the Euro which hasn't been moving much sort of moved to the top side so a bit of a knee-jerk reaction and if you were watching the numbers closely enough you'd realize that those numbers weren't the key numbers that the market is you know really focused on it's the four numbers and then the market retrace very quickly now let's have a look what's uh what's happening today so as we come into Thursday's trading right there's some inflation numbers here out of China be interesting to sort of see how these come out and see if it impacts the Aussie kiwi right that's the direct correlation with the Chinese data now more importantly the bank of England right decision right now this can be a bit of a Calamity 0.25 is factored into the market now you've got to expect right that the bank of England comes out quite hawkish right so looking at the uh the core data here right inflation at the moment year on year is at 10.1 percent and their target is two percent so they've got to raise rates I know it's only by 0.25 at the moment um I wouldn't be surprised if it was a little bit more than that but uh with inflation so far above the market it they've got to be hawkish right but that's going to be fully factored in so this is a a very tricky trading situation but with that in play it really brings in Sterling and Sterling crosses us PPI numbers well they are coming up hopefully they confirm the um the CPI numbers out of the us yesterday and just looking at those PPI numbers okay the two numbers we're really looking at are the final demand month and month and the X food and energy these numbers here now from the previous month are expecting a little bit of a bounce we'll see how that goes lower numbers really confirms a weaker dollar Outlook right but if we get stronger numbers towards the higher end of the range here then that may sort of take a little bit of Shine off what the inflation numbers were doing yesterday and bring it back into sort of well not really balance but just take out the sort of goodness that we saw in the US inflation numbers which will slightly weak up on the uh CPI itself and we'll see how it goes but negative numbers is where the trading opportunity really is so if you come across to the charts here Sterling as I was just saying Sterling is a major Focus so if I get up my Sterling template here I can have a look across the board now we've got a resistance line up here at 126.80 right it's a long term resistance line on Sterling you've got to be having a look at that because there's going to be a lot of stop losses above that level uh you get 100 well 100 odd points down to the support line I'm not so sure about that but Sterling has been doing a good job against most instruments but now breaking down against the Kiwi starting to break down against the Aussie and you can see here we've got a nice trend line here on Sterling Yen that's probably the best technical setup out of all of them um Euro Sterling well you'd expect Euro still only be lower because Euro hasn't been doing anything Sterling's been rallying and Sterling CAD sort of mid-range but ready to break down along with its uh commodity currency cousins kiwi and Aussie right so what you're trying to identify is where is the opportunity don't get this the inflation numbers are factored in and probably a hawkish tone from the bank of England so what do you do well to me I'd be watching the market what they say you're looking for a surprise and I just don't know what that surprise could be at this point so it's a bit of a tricky one to me I'd always go back towards where the uh the best technical setup or think about if they weren't so aggressive on their hawkish tone what would happen to Sterling okay so now whether that's a seller or buy you probably have to sort of Throw your arms up in the air but that's where we are Sterling is the major Focus there's uh not much more to it there's no need to sort of Chase uh other instruments but uh if you're looking to trade keep an eye on Sterling obviously it is going to be moving around on the data the PPI number after the release right it's an hour and a half after maybe an easier trade we get a hawkish tone here on from the bank of England like I'm talking very hawkish well then you might start to see Sterling rally we get weaker PPI numbers Stirling was gonna got a rally right it's about connecting the dots with the uh data releases and that's where you can find some of the better trades all right and that's pretty much all we've got today guys there's nothing more to look at if you go through the next couple of days of data you'll find that we do have a range of extra Sterling numbers GDP growth industrial production and manufacturing production numbers these are really uh I'd say higher impacting than what this calendar is suggesting and that's where my focus would be so Sterling still in crosses for the next 48 hours have got to be in Focus good luck guys all the best cheerio