Headline CPI in the UK ticked down from 5% to 4.8%, exactly as expected. This is still far off from the official target of around 2%, but the BOE sees a big downfall coming in 2012.
Core CPI dropped from 3.4% to 3.2%, a bit lower than 3.3% that was predicted. On the other hand, the Retail Price Index (RPI), which is of importance, dropped from 5.4% to 5.2%, while a drop to 5.2% was expected.
All in all, the figures are in line with expectations and have a small impact on the British pound. Mervyn King and his colleagues now focus on growth and employment, which are weak, and an expansion of the Asset Purchase Facility program (or QE) is eyed at the beginning of 2012.
GBP/USD is stable just under 1.56. It dropped from the 1.5633 line earlier in the day, in tandem with the euro. Support is at 1.5530.
For more on the pound, see the GBP/USD forecast.
Employment figures are published tomorrow, and are of higher importance. The fresh Claimant Count Change is the most important part.
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