Pound pulls back as inflation dips

After reaching its highest level against the US dollar in 8 weeks yesterday, the pound has pulled back following a lower than expected inflation print. The CPI for August came in at +1.7% Y/Y, below the consensus forecast of +1.9% Y/Y with the core reading also missing expectations for a 1.8% Y/Y increase, rising by +1.5%. This is the lowest core reading since November 2016 and could be seen to raise the chances of a rate cut from the BoE. There's been a clear trend amongst central banks towards lower interest rates in recent months, but the BoE have yet to follow suit with some data points even suggesting that a tighter monetary policy could be warranted were it not for Brexit uncertainty. However, Brexit uncertainty looks like it's here to stay for the foreseeable future and further weakness in inflation metrics in the coming months could see calls for Governor Carney and his fellow rate setters to lower the base rate gain prominence - especially given the anaemic growth figures that have seen the UK flirting with a technical recession.