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UK inflation slides to 3% as expected – GBP continues downward correction

Inflation in the UK slides to 3% y/y as expected. Month over month, this is an advance of 0.4%.. Other figures were mixed: core inflation dropped from 2.7% to 2.5%, more than forecasts. PPI also fell short of expectations with a marginal rise of 0.1% while PPI Output came out ahead of projections with 0.4%. All in all, there were no big surprises here.

GBP/USD slips from around 1.3780 to 1.3762, extending the correction. Update: after the initial slide, Sterling stabilizes as the news was generally not a shocker.

The UK was expected to report annual inflation of 3% in December after 3.1% in November, a minor slide.

GBP/USD slipped off 1.38 ahead of the publication, as the US dollar was making attempts to recover. The greenback suffered from a massive sell-off that accelerated on Friday despite an OK inflation report from the US.

Even the pound, with all the worries about Brexit and clear signs of a slowing economy, benefitted. Pound/dollar reached the highest levels since before the EU Referendum on June 23rd 2016.

More:  GBP/USD: Staying Structurally Bullish Targeting A Break Above 1.40

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.