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UK inflation misses with 1.8% – GBP/USD extends slide

Inflation in the UK is slightly cooler than markets had anticipated. Prices  dropped by 0.5% m-m as projected, but the y/y numbers are a miss. CPI is up 1.8% and core CPI remained stuck at 1.6%. Clothing store discounts are cited as the main reason for the weaker data.

GBP/USD, which was already sliding, extended the falls and hit a new low of 1.2483. Update: the pair extends its falls to a new low of 1.2458.

Here is how it looks on the Sterling/dollar chart:

More:  GBP: More Sensitive To Good News In The Near-Term – BTMU

Other figures:

  • RPI is up 2.6%, below 2.8% expected and 2.5% last time.
  • PPI Input is up 1.7%, above 1% expected and below 2.7% seen last time. PPI Output is up 0.6%.
  • The House Price Index is up 7.2%, above 6.9% expected.

The United Kingdom was expected to report another rise in inflation. Headline CPI was  expected to rise from 1.6% to 1.9% y/y in January 2017.  Core inflation was  predicted to rise from 1.6% to 1.8%.

GBP/USD was trading around 1.2520, down from a peak of 1.2548 earlier in the day. Front-running a release is quite common when it comes to UK publications. Are markets anticipating a somewhat  weaker outcome?

The BOE would like to see lower inflation but  would not want to raise rates to make it happen. Carney and co. would like to remain neutral.

More:  GBP: ‘No Fallback Options For Hard Brexit’; We Stay Core Short Sterling – Deutsche Bank

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.