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British Pound Unfazed by Mixed CPI data, Slight Miss to Expectations

British Pound Unfazed by Mixed CPI data, Slight Miss to Expectations

Oded Shimoni, Junior Currency Analyst


Talking Points:

  • The British Pound little changed versus other major currencies
  • UK’s Core CPI at 1.2%, below expectations
  • Headline CPI rises to 0.3% year-on-year, as expected

Find Key Turning Points for the British Pound with DailyFX SSI

The British Pound was little changed versus other major currencies (at the time this report was written) after the UK’s Consumer Price Index (CPI) figures released today showed mixed figures in January. Headline CPI showed an annual rise of +0.3% percent, as was expected by economists, which was above the December reading of +0.2%. The month on month figure came below expectations printing -0.8%, below the prior +0.1% and the expected figure of -0.7%. Core CPI, which excludes volatile factors such as food, energy, alcohol, and tobacco, printed +1.2%, below the expected +1.3% figure and the prior +1.4% print. Looking into the report, the Office for National Statistics said that the main contributors to the rise in the rate were motor fuels, and to a lesser extent food, alcoholic beverages and clothing. This is in line with the mixed figures from the core and the headline reading, as the volatile element excluded from the Core figure contributed the most to headline CPI.

CPI readings are a key measure for the BoE in deciding monetary policy. In their latest Quarterly Inflation Report at the beginning of the month, the BoE said they see inflation, at +1.2% in Q1 2017, down from a projection of +1.5% from November’s Inflation Report. The Monetary Policy Committee (MPC) commented that risks to the central projection are skewed a little to the downside in the near term, reflecting the possibility of greater persistence of low inflation. It seems that the figures today did little to sway market bets on possible implications for the BoE; while the headline figure rose slightly, the Core figure declined, and the British Pound was little changed versus other major currencies.

GBP/USD 5 Minute Chart

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