Quite a shortcoming in key UK data: CPI dropped to 1.5%, a level unseen in a long time. Apart from the HPI, all the other figures also came short of predictions. Headline CPI was expected to drop to 1.7% in May from 1.8% in April. Core CPI was predicted to fall to 1.7% from 2% but in fact slid to 1.6%. The Retail Price Index (RPI) carried expectations to remain unchanged at 2.5% but dropped to 2.4%.
GBP/USD traded at around 1.6980 before the initial publication, climbing from lower ground seen earlier in the day. The pair is now reversing the small gains and falling to 1.6940.
Looking at the chart, GBP/USD is now at the bottom of the post-Carney range. 
Other figures: HPI was expected to continue advancing from 8% to 9.1%, reflected to steaming hot housing sector and the actual number is 9.9%. Producer prices were estimated to have rise by 0.1% in both Input and Output measure, m/m but they both came out negative: PPI Input dropped by 0.9% while PPI Output shed 0.1% m/m.
Cable finally made the break above 1.70 yesterday, but after reaching a multi-year peak of 1.7011, it retreated. The post GFC high of 1.7042 is looming above. For more levels, events and analysis, see the GBPUSD forecast.
This is the first major publication in the UK this week. The second one is the release of the MPC Meeting Minutes from the June meeting. Given Carney’s comments, there is a chance that we will discover that one member voted for a rate hike.
We have already heard from David Miles, an MPC member, that said that he may vote for a rate rise before his term ends in May 2015.
A rate hike could come earlier than expected, perhaps even in late 2014.
Analysis: Carney preempted Meeting Minutes
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