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Slightly stronger than expected inflation  numbers in the UK. The annual level is a positive 0.1% and month over month, prices fell only 0.2% and not 0.3% as had been expected. Also the important RPI and core CPI beat expectations.

GBP/USD jumps around 30 pips to 1.5630. Update: the pair continues north and has already reached a high of 1.5660. It seems that this small pick up in inflation stirs hopes that the BOE will raise rates sooner rather than later. Caution is warranted.

Inflation in the UK was expected to remain flat for yet another month. Annual CPI has been flirting with the 0% level for quite a while.

GBP/USD was trading around the round level of 1.56  towards the publication.

Other UK inflation figures:

  • RPI was expected to remain 1% y/y. Actual 1%.
  • Core CPI was predicted to remain at 0.8% y/y. Actual 1.2%.
  • PPI Input carried expectations for -1.8% m/m. Actual: -0.9%.
  • PPI Output was estimated to slide 0.1%. Actual: -0.1%.
  • The HPI had 5.9% as the consensus. Actual: 5.7%.

The Bank of England watches the inflation rate quite closely. The current levels of  inflation are easily blamed on low commodity prices, and especially the low price of oil.

However, the core numbers are not that promising either. Together with the not-so-impressive rise in wages, it is hard to see a hike anytime soon. Current predictions stand on late spring 2016 – aka May or June.

Carney’s confusing messages have triggered a lot of volatility.