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UK Inflation Data: GBP/USD Reaction

Inflation data was soft for the month of July.

UK CPI inflation was an annual rate of 1.6% in July when compared to the CPI in July 2013. This missed forecasts around 1.8%. June's reading was 1.9%. July's decline in consumer prices was led by a drop in prices of clothing. 

PPI Input Inflation in July was at -1.6%. Input prices have been declining 6 out of the last 7 months.
Retail Price Inflation on the year came in at 2.5% for July, missing forecast and June's reading of 2.6%.
The soft inflation data points to a delay in the Bank of England's rate hike schedule. It has been moved to late 2014, than back to early 2015 due to softer growth data and wage growth concerns. Now, if we see the CPI inflation unable to rebound and trend back toward 2.0%, the Carney and his colleagues might have to vote to move the rate hike further down the line. 

(GBP/USD 4H Chart 8/19)
The sharp bearish reaction is also making a bearish engulfing candle in the daily chart. Not only does that signal bearish continuation, the break below the 200-day SMA is also a strong bearish sign. 
Today's price action exposes the March low around 1.6465. If price continues to fall without a hitch, we can start expecting a hitch - or some consolidation/correction attempt when price approaches this former support pivot, especially if the daily RSI continues to dig into oversold territory below 30, below 20.

(GBP/USD Daily Chart 8/19)