Global macro overview for 20/12/2016:
Interesting comments from Ian McCafferty, external MPC member, regarding UK inflation had appeared at Bank of England website. He said, the BOE has limited tolerance of CPI overshoot as it depends on the second round effects. Moreover, despite the fact that the Bank of England has faced a difficult policy trade-off since the EU vote, the UK CPI will rise quite sharply and should remain above the BoE target in 2017. In conclusion, very hawkish view from MPC member McCafferty regarding the inflation expectations in 2017 and beyond. Please notice, the lack of the rise in inflation in years despite the BoE efforts has been the main concern for the UK policy members. Just recently after the Brexit, the CPI index has started to slowly pick-up, but whether it will raise any higher to the levels projected by BoE in 2017 is still a matter of anticipation not certainty.
Let's now take a look at the GBP/USD technical picture at the 4H time frame. This pair is still trading inside of the dashed black channel and the bears are trying to test the support at the level of 1.2313 - 1.2301 area. The near-term outlook still remains bearish and the lower channel boundary around the level of 1.2255 might be tested soon.
