The Consumer Price Index in the UK slid from 5.2% to 5%, a bit under 5.2% that was expected. The Retail Price Index (RPI) dropped from 5.6% to 5.4%, also below a drop to 5.5% that was expected. On the other hand, Core CPI ticked up from 3.3% to 3.4%.
GBP/USD is bouncing higher following this release, but all in all, it came within expectations.
The Bank of England is convinced that inflation will drop in the next few months, and return to the area of the 2% target. In October, the MPC voted to expand the QE program to 275 billion pounds. The interest rate remains at the historic low of 0.50% since the beginning of 2009.
The economy is still struggling. Unemployment is on the rise. Tomorrow we will get fresh unemployment numbers and they are expected to show another rise. See how to trade this event with GBP/USD.
GBP/USD was dropping towards the release, as the dollar strengthened across the board. It already dipped below the 1.5850 line. Further support is at 1.5780. Significant resistance is at 1.60.
For more, see the British Pound forecast.Get the 5 most predictable currency pairs