DailyFX.com -

Talking Points:

- Weaker than expected UK CPI (MAY) knocks back British Pound.

- Technicals see it as a contrarian sell; look to buy the dip.

- See the UK Consumer Price Index data on the DailyFX Economic Calendar.

In what may prove to be an iteration of the timeless duel of the 'which is mightier - the pen or the sword?', the release of the May UK inflation report has done little to shake the market's faith in the Bank of England's fresh hawkish posture.

While the monthly, yearly, and core yearly inflation figures missed economists' expectations in the May CPI reading (sword - hard data), the looming commentary from BoE Governor Mark Carney's Mansion House speech (pen - mere words) last Thursday has, and may prove to be, the overwhelming driver of the British Pound, eclipsing whatever influence today's inflation data may temporarily hold.

Governor Carney couldn't have been more straight forward when he said that a rate increase "could happen sooner than markets currently expect." Whereas a Q2'15 rate hike was being priced in, swaps markets have repositioned themselves for an early-Q1'15 rate hike.

A few more pieces of hot economic data, and it wouldn't be surprising to see those rate hike expectations spill over into Q4'14 - which would be a boon for the Sterling.

Accordingly, view the video above for a look at setups in GBPUSD, GBPCHF, EURGBP, and GBPJPY, as evidence mounts that we should be 'buying dips'" rather than 'selling rallies' in the GBP-crosses.

Read more: Bear Flags in EUR/JPY, EUR/USD Collide with FOMC This Week

Related Articles
  1. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  2. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  3. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  4. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  5. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  6. Investing

    Financial News Comparison: Bloomberg Vs. Reuters

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  7. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
  8. Forex Education

    The Top Uses For P2P Currency Exchange

    Peer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
  9. Forex

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
  10. Entrepreneurship

    Top Forex Trading Apps

    A brief overview of the top apps that help forex traders with on time information, charts and more.

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!