UK Inflation Highlights:
- UK inflation data comes in softer than expected, how will the BoE react?
- Energy prices remain the key catalysts for rising prices
- GBP/USD turns bearish on the release of the data
UK CPI (September) Slightly Softer than Expectations
The release of UK CPI data for the month of September came in at 2.9% (below the expected 3%) while headline inflation (YoY) came in at 3.1% (below the expected 3.2%)
DailyFX Economic Calendar
Although the slightly softer print may cast a shadow of a doubt for the MPC members who currently maintain a dovish stance, the transport and housing sector continue to weigh on consumers who are now paying more for items tied to these industries.
Source: Office for National Statistics
With energy prices and supply shortages weighing on consumers, this month’s inflation report is expected to be of particular interest for the Bank of England (BoE) who have been facing pressure to rate hikes in their next meeting on 4 November 2021.
Source: Refinitiv
Visit the DailyFX Educational Center to discover how CPI data affects currency pairs
Upon the release of the data, GBP/USD tumbled as investors repriced the probability of a delayed rate hike.
GBP/USD 5 Min Chart
Chart prepared by Tammy Da Costa using IG Charts
As the Bank of England prepares to meet on 4 November 2021, the release of commentary by MPC meetings will likely serve as an additional catalyst for price action for the imminent move.
| Change in | Longs | Shorts | OI |
| Daily | 5% | -1% | 2% |
| Weekly | -18% | 31% | 5% |
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
