Selling GBPUSD if UK CPI is no higher than 2.2%

The Bank of England governor Andrew Bailey said he may be “a bit more aggressive” about rate cuts if inflation remains under control.

In August, the Bank of England reduced interest rates from 5.25% to 5%, making the first cut in more than four years.

The Bank of England is due to hold two more meetings this year to make decisions on interest rates: in November and December.

At the Bank's most recent meeting in September, Bailey was optimistic about a further decline in borrowing costs. But he stipulated that it was “vital” at the time for inflation to remain low.

Now, with inflation close to the BoE's target of 2%, the attention is focused on how many rate cuts will be delivered before the end of the year.

Many market participants expect the BOE to cut rates at its November meeting. However, after Bailey's statements, expectations for a rate cut in December have increased as well.

The Bank of England will announce its next interest rate decision on November 7.

The meeting will be preceded by the publication of the UK consumer price indices. The September CPI is scheduled for release on October 16. Since the Bank of England is focused on inflation when determining its moves on monetary policy easing, it is worth keeping a close eye on this publication, especially on the annualized CPI value.

If it does not actually exceed the previous level of 2.2%, it will significantly increase the chances for a more aggressive easing and could trigger an impulsive short-term decline in GBPUSD quotes.

The final recommendation is to sell GBPUSD provided that the value of the UK Consumer Price Index (year-on-year) does not exceed the level of 2.2%. It is better to enter the trade if the current price of GBPUSD is not lower than the level of 1.3150.

The profit is taken at the level of 1.3020. The loss is fixed at the level of 1.3230.

The volume of the opened position should be set in such a way that the value of the possible loss, fixed with the help of a protective Stop-loss order, is no more than 2% of the deposit funds.