GBP/USD to collapse below 1.1860 as anxiety soars ahead of US Inflation

• GBP/USD is likely to display more losses below 1.1860 as odds of a higher US Inflation have advanced.
• The scenario of lower earnings along with real income shock is no less than a nightmare for the households.
• The preliminary estimate for the annual CPI is 8.8% and for core CPI is 5.7%.

The GBP/USD pair is hovering around the fresh two-year low printed in the Asian session at 1.1860. A fresh round of selling looks around the corner as investors are underpinning the greenback in the entire FX gamut. Rising anxiety over the release of the US Inflation which is due on Wednesday has brought extreme selling pressure for the risk-perceived currencies.

The fact is, investors are expecting the US inflation rate at a whopping figure of 8.8%, higher than the prior print of 8.6%. However, the core Consumer Price Index (CPI) that doesn’t inculcate food and energy bills is expected to slip to 5.7% from the former release of 6%. One could do simple math and could understand that the volatility in the prices of oil and food products is so huge that despite a lower consensus for the core CPI, the plain-vanilla CPI is aiming higher.

A higher plain-vanilla CPI will hurt the paychecks of the households in the US significantly. Last week’s Average Hourly Earnings were lower than the former figures. The scenario of lower earnings along with real income shock is no less than a nightmare for the households.

On the UK front, investors have shifted their focus on the economic data, which will release on Wednesday. The Gross Domestic Product (GDP) is seen at 0% vs. -0.3% printed earlier. While the annual Manufacturing Production may slip to 0.3% from the former release of 0.5%. Apart from that, the political jitters are escalating as more officials are presenting their leadership proposals for the leader of the Conservative Party.