After a quiet start to the week, investors will turn their attention back to the economic data on Tuesday with key inflation numbers from the United Kingdom.

National Statistics in London will get the ball rolling at 08:30 GMT with a batch of inflation data covering the retail, consumer and producer levels.

The Retail Price Index is expected to show annual growth of 3.8% in August, compared with 3.6% the previous month. The Producer Price Index (PPI) Output will likely show a reading of 3.1% for the same month. The annual Consumer Price Index (CPI) likely rose to 2.8% in August from 2.6% the previous month.

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The Bank of England (BOE) has already warned investors that inflation will probably overshoot its target in the short-term as ultra-loose monetary policy compensates for Brexit. Negotiations over the future of UK-EU relations officially began in June following the snap parliamentary election. The election result weakened Prime Minister Theresa May’s mandate for a ‘hard Brexit’ after the Conservatives failed to regain a parliamentary majority.

There are no other major releases scheduled for Tuesday. In the United States, the National Federation of Independent Business (NFIB) will release its monthly Business Optimism Index. Small business is the lifeblood of the world’s largest economy.

After a disastrous week, the US dollar rebounded on Monday. The DXY dollar basket rose 0.6% to finish at 91.88. The index rose slightly during Asian trading.

Last week, the greenback plunged to its lowest level since January 2015, with the euro and Canadian dollar notching multiyear highs.

A stronger US dollar triggered a sharp downward correction for precious metals on Monday, with gold and silver prices finishing lower on the day.

EUR/USD

Like other dollar peers, the euro broke sharply lower on Monday, falling below 1.2000 US. The EUR/USD is currently trading around 1.1960. The next support level comes in at 1.1910. On the flipside, the pair will likely eye a return to 1.2000.

GBP/USD

The British pound traded within a narrow range on Tuesday, although pressure is building back toward the 1.3200 US handle. Cable last reached that milestone in early August before engaging in a multiweek correction. The 1.3200 level is the immediate resistance for the GBP/USD. A clean break above that level would lead to a test of the 1.3220 region. On the opposite side of the ledger, the 1.3150 area offers immediate support, with further downside projected at around 1.3100.

GOLD

A rebounding dollar drove gold bullion sharply lower at the start of the week. Spot prices fell nearly $20 and were down again on Tuesday. Prices are currently hovering near two-week lows. The outlook on bullion will depend largely on fundamental forces. In terms of short-term momentum, the RSI and MACD show weak underlying momentum.

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