One way momentum now for GBP pairs as reality replaces robot 16 May
At the risk of repeating myself can I just refer anyone still curious about the moves to my UK inflation data preview and price action post after the release.
It's not my gloating at getting it right but more by way of trying to explain what traders are up against nowadays.
GBPUSD has now triggered stops through 1.2920 and 1.2900 to post 1.2875 .EURGBP has been up to 0.8570
With most desks now manned by robots, not humans, the reaction to data will invariably spike/drop on the headline. Then comes the analysis/reality check of the whole situation and the potential reversal or second-wave move following the first.
Yes CPI, RPI and PPI output all showed stronger readings but one can say this is factored in and the BOE have themselves said last week that inflation will peak quicker and lower than previously thought. I have said for a long time I see no rate hikes in UK for a long while yet. The BOE and market now seem to share that view.
Ok, so oil prices are currently on the rise again but there's a time lag and we've yet to see the impact of the recent falls.
So does it make a bit more sense now ? In any case does it need to make sense anyhow?
Yes it might be an excessive move but remember, ours is not to reason why. Ours is just to sell and buy.
Go with the flow and relax.