GBP/USD Little Changed After the UK CPI Beat Expectations
- The British Pound was little changed versus the US Dollar
- UK’s Core CPI at 1.4%, above expectations
- Headline CPI prints 0.5% year-on-year versus 0.4% expected
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The British Pound was little changed versus the US Dollar, after the UK’s Consumer Price Index (CPI) printed figures above expectations.
Headline CPI showed an annual rise of 0.5%, above the expected reading of 0.4%, and the prior 0.3% print. The month on month figure came in line with expectations by printing an unchanged 0.2% figure.
Core CPI, which excludes volatile factors such as food, energy, alcohol, and tobacco, was better than expected at 1.4% versus the expected 1.3% print.
The figures were joined by RPI and PPI numbers all beating expectations across the board.
Looking into the report, the Office for National Statistics said that Rises in air fares, prices for motor fuels and a variety of recreational and cultural goods and services were the main contributors to the increase in the rate but were partially offset by falls in the price of furniture and furnishings and accommodation services.
Carney said before “Brexit” that a weaker Sterling on a vote to leave the EU would mean policy makers having to choose between tighter policy to stabilize inflation or stimulus to boost output. Judging by the last BoE rate decision press release, the bank appears to be leaning in the direction of loosening policy to support output.
Taking this into consideration, the figures today might have had reduced impact since the market anticipates easing by the bank in the next August meeting, maybe even regardless of this data set, as the June figures represent information from the pre-“Brexit” era.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 56.9% of traders are long the GBP/USD at the time of writing. The SSI is mainly used as a contrarian indicator, implying possible weakness ahead
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GBP/USD 5-Minute Chart: July 19, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.