FxWirePro: Higher inflation might propel pound to test September peak at 1.365

United Kingdom’s inflation report for the month of September will be released at 8:30 GMT today, and a higher than expected reading could boost pound’s performance and push it higher against the dollar to test the September peak around 1.36 area. At the previous meeting, the Bank of England (BoE) signalled the possibility of a rate hike at the coming meeting, and that has kept the pound upbeat despite the domestic political trouble, where Prime Minister Theresa may is constantly pushed to resign. The Brexit deadlock has also failed to propel pound lower as speculators remain bullish pound over rate hike.

Inflation numbers will be released at 8:30 GMT, which will include Retail Price Index (RPI), House Price Index (HPI), Producer Price Index (PPI), and Consumer Price Index (CPI). It can be seen from the charts most of the measure, except for HPI are heading higher and reached the highest level in more than five years. Inflation is expected to edge higher in today's report.

Recommendation:

Buy pound against the dollar at the current rate of 1.327, targeting 1.365 and with a stop loss around 1.304. The target might get extended to 1.382