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Forex News: Britons Expect Inflation to Rise Above 3% in Upcoming Year

Friday, 07 December 2012 10:07 GMT

by  Benjamin Spier,

BoE quarterly survey finds people expect 3.5% inflation over the next 12 months; Sterling temporarily declines on weak industrial production…

THE TAKEAWAY: Quarterly BoE inflation survey finds expectations for 3.5% -> Survey measures Britons’ forecasts for the next 12-months -> Sterling trading lower on weak production

Britons expect inflation to climb to 3.5% over the next 12 months according to the Bank of England’s quarterly survey. The expectations were higher than predictions for 3.2% inflation in August’s survey.

In October, inflation rose to a 5-month high of 2.7% because of the rising costs of tuition. Any inflation rate above the Bank of England’s 2.0% target could discourage the central bank from taking further monetary action. Just yesterday, the Bank of England kept the asset purchase target at 375 billion Euros, despite the bank’s earlier warning that the UK economy could slide into negative growth in Q4.

Sterling temporarily declined in forex markets following the simultaneous release of disappointing industrial production numbers. Production fell 0.8% in October, much lower than expectations for a 0.8% rise. GBPUSD quickly erased the losses and is now trading closer to 1.6040. Resistance could be provided at 1.6040, by the 61.8% retracement of the fall from November’s high to the month’s low.

GBPUSD 15-minute: December 7, 2012

Britons_Expect_Inflation_to_Rise_Above_3_in_Upcoming_Year_body_gbpusd.png, Forex News: Britons Expect Inflation to Rise Above 3% in Upcoming Year

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