UK inflation jumps higher; GBP/USD above $1.32
|The most recent data on UK inflation has shown that price pressures rose markedly from their last release with the leading gauge remaining comfortably above the Bank of England’s target. The consumer price index for August rose by 2.7% in year-on-year terms, above the July release of 2.5% and is a bigger shock when you consider that most had expected a pullback to 2.4%. The core figure is often seen as a more true reflection and this also rose when a fall was expected, coming in at 2.1% after last time out showed 1.9%.
An increase of 300 basis points may not sound a lot but it represents the largest increase since last August’s data and that came as less of a shock as the consensus forecast was for a 0.2% increase anyway.
The pound has jumped in the immediate reaction reaching its highest level since July against the US dollar above $1.32 and also made a 7-week peak against the Euro just below €1.13. While inflation remains stubbornly above the BoE’s target of 2% economic data is taking a back-seat for the foreseeable future as far as driving the pound is concerned with the ongoing Brexit negotiations a far more important factor.
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