Binary options on GBP/USD lost the ground sharply on the European session following lower than expected inflation data coming out of the UK. The CPI reading surprised binary markets after dropped to 2.4% in June, missing estimates to remain unchanged from May’s levels which stood at 2.8%, also undershooting the BoE’s forecasts in the second quarter which suggested consumer prices to hover around 3%. Moreover, the Core CPI printed its weakest figures in more than three years at 1.3%.
Coupled with the mentioned above, binary options analysts suggest UK retail sales and jobless claims due to be released later in the week, to follow suit soft British indicators in the prior month. The weak economic recovery which could lead to another contractionary quarter combined with persistent decline in prices pressure are creating an ideal environment to bet on further monetary easing measures by the Bank of England in near-term.
However, binary bullish traders could underestimate such speculations given that the last expansion of assets purchases made by BOE didn’t damage the pound ‘s sideways mood in the last month. Furthermore, it’s not a customary to see the central bank injecting additional liquidity in two consecutive months. Hence, policymakers might take a “wait-and-see period” before deciding on further stimulus.
Technically, the chart shows an initial breakout below 1.5600 major barrier following failure to sustain position above 1.5650 in the last hours. While we wrap up this analysis the binary cross is accelerating downside moves which indicate that bears have already rode the binary market. The next bearish targets will be around 1.5525 mark that comprises 100 and 200 HMA, also 50% retracement of broader rally connecting to June’s low of 1.5266 , up to the same month’s peak at 1.5776. If the matter just related to pricing the latest data, the binary options should find sound support at those barriers, at least would respect the 1.5500 psych ground. Otherwise, we are talking about a topping scenario or bearish reversal in the near-term with 1.5450-1.5400 region coming insight next. To the upside, only climbing back above 1.5600 could ease immediate bear pressures and help improve the tone ahead of the recovery extension.
The information in the above analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.