GBP/USD Underpinned as UK Inflation Hits 3%
- UK inflation hits 3% in September on higher food and fuel prices.
- UK Central Bank under pressure to raise interest rates at the November meeting.
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UK headline inflation hit 3% in September, the highest level since April 2012, while core inflation held steady at a five-year high of 2.7%. While the rise in the headline figure was widely expected, the latest figure will increase pressure on the central bank to hike rates at its next MPC meeting in November. BOE governor Mark Carney had already indicated to the market that it may be appropriate to raise rates in the ‘coming months’, warning that the economy was running out of spare capacity.
Commenting on today’s data, ONS head of inflation Mike Prestwood noted that food prices and a range of transport costs helped to push up inflation in September, partially offset by clothing prices that rose less strongly than this time last year.
Chart: GBPUSD Five Minute Timeframe (October 17, 2017)
GBP had weaken marginally ahead of the release after news that last night’s dinner between the UK and the EU had failed to bring around any change in stance on upcoming trade talks. There was however a slight bullish undertone after both sides said that talks must accelerate, while reports note that the EU is working internally on preparation for a transition period.
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--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.