The final two weeks of August typically brings a significant summer slowdown. This year is unlikely to be an exception, and both the economic and earnings calendars reflect that. Nevertheless, traders and investors can still look ahead to the latest UK inflation data, and the Federal Reserve’s FOMC July meeting minutes, both due on Wednesday, followed by earnings from giant US retailer Walmart on Thursday. The final week of August is likely to be even quieter, although Nvidia's results are due on Wednesday 26 August, which may cut holidays short.
UK CPI
Wednesday 19 August
Analysts forecast that UK inflation has accelerated to 0.4% month-on-month in July, up from 0.1% in June, with a rise to 2.9% year-on-year, up from 2.6%. The core consumer price index (CPI), which excludes volatile food and energy prices, is expected to slow to 2.5% year-on-year, from 2.6%. With no Bank of England meeting until 17 September, and no expectations of a change in UK interest rates in the foreseeable future – unless the number surprises to the upside – this report seems unlikely to move markets much. A hot CPI figure could be bullish for GBP/USD; but anything in line with or cooler than analysts’ expectations may weaken the pair, especially given that the FX rate has been unable to break through resistance near $1.355. If it can push higher and break through resistance, it has room to rise to $1.36. However, failure to break out, or a decline below the 10-day exponential moving average and support at $1.344, could result in GBP/USD falling back to roughly $1.32.
