UK CPI rates come in lower than expected

The UK’s CPI rates for September were released earlier on today and came in lower than expected both on a headline and on a Core level. In particular, the headline CPI rate on a yoy basis for September came in at 1.7% which was lower than the prior rate of 2.2% and the expected rate of 1.9%. Furthermore, on a Core level, the CPI rate also on a yoy basis came in lower than expected at 3.2% versus the expected rate of 3.4% and the prior rate of 3.6%. Overall, the UK’s CPI rates imply easing inflationary pressures in the UK economy, which in turn may increase pressure on the BoE to adopt a more aggressive rate-cutting approach in their next monetary policy meeting. In conclusion, the implications of further rate cuts may weaken the GBP. Australia’s employment data is set to be released during tomorrow’s Asian session. The unemployment rate may take on an even greater significance for Aussie traders, as the RBA’s last meeting minutes which were released last week, indicated that the bank discussed both the possibility of cutting and hiking interest rates. Moreover, with the unemployment rate currently expected by economists to remain steady at 4.2%, any deviation to the upside or downside may lead to increased market volatility.In the US Equities markets, Goldman Sachs (#GS) released their earnings report yesterday and beat market expectations, which appears to be in line with other big US banks in beating economists’ forecasts. However, US stock markets appear to have been negatively impacted following ASML’s leaked Q3 results which according to some media outlets, revealed a downwards revision to the company’s 2025 sales outlook. Given the company’s global standing, the downward revision may spread concern about the greater health of the overall tech sector.

US100 appears to be moving in an upwards fashion. We opt for a bullish outlook for the index and supporting our case is the upwards moving trendline which was incepted on the 5 of August. Yet, the RSI indicator below our chart appears to have dropped below 60, which may imply that the bullish momentum guiding the index, might be decreasing. Nonetheless, for our bullish outlook to continue, we would require a clear break above the 20800 (R1) resistance level, with the next possible target for the bulls being the 21500 (R2) resistance line. On the flip side, for a bearish outlook we would require a clear break below the 20100 (S1) support level, with the next possible target for the bears being the 19470 (S2) support line. Lastly, for a sideways bias we would require the index to remain confined between the sideways moving channel defined by the 20100 (S1) support line and the 20800 (R1) resistance level.

GBP/USD appears to be moving in a downwards fashion. We opt for a bearish outlook for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure below 40, implying a bearish market sentiment. For our bearish outlook to continue we would require a clear break below the 1.2890 (S1) support line, with the next possible target for the bears being the 1.2670 (S2) support level. On the flip side, for a sideways bias, we would require the pair to remain confined between the 1.2890 (S1) support line and the 1.3040 (R1) resistance level. Lastly for a bullish outlook, we would require a clear break above the 1.3040 (R1) resistance level, with the next possible target for the bulls being the 1.3140 (R2) resistance line.

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Today in the European session, we get UK’s CPI rates for September and during the American session we get the US API weekly crude oil inventories figure. In tomorrow’s Asian session we get Japan’s trade balance figure in September and Australia’s employment data also for September. On a monetary policy level, BOJ board member Adachi is set to speak today.