British Inflation Surprises and Rises: 2.6% YoY

2

The annual Consumer Price Index in the UK rose for a change: from 2.4% to 2.6% in July. Early expectations stood on 2.3%.

The target of the Bank of England is 1-3%. CPI returned to the 3% level in April after many months of higher price rises. It is still within target.

GBP/USD was trading just above 1.57 early in the day and moved a bit higher to 1.5720 just before the release.

Also accompanying indicators surprised: Core CPI rose to an annual level of 2.3% and the Retail Price Index (RPI) jumped to 3.2%.

Core CPI was expected to remain unchanged at 2.1%. The RPI was also expected to remain at the same level as last month: 2.8%. HPI, which is usually dismissed due to other figures, remained unchanged at 2.3% and didn’t rise to 2.7% as expected.

For more on sterling, see the GBPUSD prediction.

This lowers the already low chances of a rate cut: BOE Governor Mervyn King played down this option recently. However, having inflation in target allows the central bank to provide more monetary stimulus through its Asset Purchase Facility program (QE).

Get the 5 most predictable currency pairs

About Author

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.