At 4:30 a.m. we will have UK CPI headline y/y. This is going to be highly anticipated number. Because we just had the PPI indicator, there will be a lot of speculations that the CPI is going to come out higher. I am going to trade the headline number which is more in focus right now. It is expected to come out at 2.6%. If it comes out at 2.9% or higher, I would buy GBP/USD and expect 40 pips move; if it comes out at 2.4% or lower (or 2.5% if there are no conflicts), I would sell GBP/USD and expect 40 pips move as well.
Because people are expecting higher CPI, if it comes out higher by 0.1 or 0.2, it may spike up but it might be a short living trade. Probably there are a lot of people already holding long positions on GBP/USD so they might be taking profits as soon as the number is released. Therefore, be very careful with a long trade at the time of release. Also, you might consider entering a long trade around 2.00 a.m. and get out before the news. Don't put a lot of money on such speculative trade, and make your own judge on it.
In addition to GBP/USD, try to trade some other pairs such as GBP/JPY, EUR/GBP (reverse triggers) or GBP/CHF. On the other hand, if we get 2.4% (or 2.5% with no conflicts from the other numbers), that should be a great selling opportunity on the GBP/USD because that would be totally opposite to what people are expecting right now.
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