UK inflation stuck at 2.6% – GBP falls

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Inflation in the UK is not going anywhere fast: headline CPI stands at 2.6% once again with a monthly drop of 0.1%, also worse than expected. Core CPI is also stuck at 2.4% and PPI remained flat. There were also beats, but not on the critical figures: RPI is up to 3.6% and the HPI is up to 4.9%. Nevertheless, the report is disappointing.

GBP/USD is falling to 1.2910. So far, it does not tackle support at 1.29.

The report will cool down expectations for a rate hike, that were already subdued anyway. The recent rate decision by the BOE showed that Carney and co. were in no hurry.

Here is how the fall looks on the 30-minute chart:

The UK was expected to report a small rise in inflation: 2.7% y/y in July against 2.6% reported in June. Core CPI carried expectations for 2.5% after 2.4% and the RPI was predicted to remain at high ground.

Producer prices were expected to jump 0.5% m/m (PPI Input) and the House Price Index (HPI) was expected to continue decelerating from 4.7% to 4.3%.

GBP/USD was trading lower ahead of the publication, around 1.2940. The low for the day was 1.2930. The US dollar is extending its recovery this week, also thanks to reports about an upcoming Executive Order about infrastructure spending.

The British government presented a new approach to Brexit: a longer transitional deal that would enable a “free and frictionless” trade regime between the UK and the EU.

The announcement seems to be devised for showing internal unity within the Conservative Party and may not constitute a coherent new strategy. Markets shrugged it off. One of the issues with the new plan is that excludes the ECJ as an arbiter of disputes. Rejecting the European court and remaining in the customs union seems like a

One of the issues with the new plan is that excludes the ECJ as an arbiter of disputes. Rejecting the European court and remaining in the customs union seems like a non-starter for Brussels.

More: GBP post-BOE – can it continue falling?

Here is a daily chart of pound/dollar, showing the gradual climb and the recent fall. Support awaits at 1.29 and 1.2820. Resistance is at 1.2980.

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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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