Speculative and real-money account selling helped depress cable by a cent to new one-month lows just shy of 1.9400 after the 09:30GMT disclosure of January's softer-than-expected UK inflation data. CPI fell to 2.7%, from an 11-year high of 3.0% in December. A more modest drop to 2.9% was expected.
RPI fell to 4.2%, from 4.4%. A rise to 4.5% was expected.The sub-forecast UK inflation figures are good news for doves arguing that the peak of the UK base rate tightening cycle has already been reached.1.9385, a 38.2% Fibo retracement point of the ascent from 1.8525 (mid-Oct low) to 1.9917 (Jan 23, 15-year high), is a sub-figure bear target. Lower objectives include 1.9317 (Jan 10 floor), 1.9280, and 1.9260 (Jan 8 base).
1.9425 (earlier stall point) is now a rebound resistance level. Upper obstacles include 1.9438 (yesterday's low), and 1.9461 (today's Asian session base). Today's key US event risk is the 13:30GMT unveiling of the size of December's UStrade deficit.
Forecast: $59.7bn, from $58.2bn in November. The quarterly BoE inflation report is out tomorrow.
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