Talking Points:
- The British Pound little changed versus other major currencies
- UK’s Core CPI unchanged at 1.2%, as expected
- Headline CPI at 0.3% year-on-year, below expectations
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The British Pound traded slightly higher, but then retreated versus other major currencies (at the time this report was written) after the UK’s Consumer Price Index (CPI) figures released today showed inflation slightly missed expectations in February. Headline CPI showed an unchanged annual rise of +0.3% percent, below the expected +0.4% figure. The month on month figure came below expectations as well printing +0.2%, above the prior -0.8%, but below the expected figure of +0.4%. Core CPI, which excludes volatile factors such as food, energy, alcohol, and tobacco, printed and unchanged +1.2%, as expected. Looking into the report, the Office for National Statistics said that the largest downward contribution came from the transport sector, from price changes for items such as road passenger transport, second-hand cars and bicycles, while rising food prices, particularly for vegetables, offset this drop. This is in line with the fact that Core CPI remained unchanged.
In their latest rate decision, the BoE said inflation remains below target due to drags from energy and food prices, with core inflation subdued as well as a consequence of the past appreciation of sterling, weak global inflation and restrained domestic cost growth. Inflation figures are a key measure for the BoE in deciding monetary policy, with a mandate of a 2% inflation target. The British Pound has been selling off on risk aversion since the beginning of the European session; the slight miss to expectations may have had little effect on the Sterling in this context and the currency was little changed versus other majors.
GBP/USD 5 Minute Chart
