UK core inflation misses – GBP/USD slides

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UK headline inflation came out at 0.3% y/y in February, as expected. This is the highest in around a year, but still at rock bottom. Month over over, it fell short with -0.8%. Perhaps the bigger disappointment came out at 1.2%, worse than 1.3% predicted.

GBP/USD is a bit lower, under 1.45, off from the move it went to beforehand.

More data: PPI Input beat with -0.7% against 1.2%, PPI Output dropped -0.1% against -0.2% and the HPI missed with 6.7% instead of 7.9% predicted.

The UK was expected to report a rise of 0.3% in prices y/y in January, up from 0.2% in December. This reflects the base effects more than anything else. Month over month, a fall of 0.7% was predicted. Core inflation carried expectations for a rise of 1.3% y/y after 1.4% beforehand.

The pound was on the move already before the event with GBP/USD topping 1.45.

Yesterday, the sole hawk that voted for a rate hike, Ian McCafferty, expressed a dovish view: “the case for raising rates is less compelling” and it hurt the pound, even though he had already changed his vote to align with the majority.

Tomorrow we have another top-tier UK event: the publication of the jobs report, where wages will take center stage. And of course, the ongoing talk about the EU referendum is on the cards.

More: GBP: All Eyes On Brussels; Deal Or No Deal – BofA Merrill

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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 the 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.

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