Breaking: UK annualized CPI inflation jumps to 10.4% in February vs. 9.8% expected

UK CPI rises to 10.4% YoY in February vs. 9.8% expected.
Monthly UK CPI arrives at 1.1% in February vs. 0.6% expected.
GBP/USD jumps above 1.2250 on upbeat UK CPIs.

FXStreet Team FXStreet

According to the latest data published by the UK Office for National Statistics (ONS) on Wednesday, Britain’s annualized Consumer Prices Index (CPI) jumped to 10.4% in February against the 10.1% increase recorded in January while missing estimates of a 9.8% clip.

Meanwhile, the Core CPI gauge (excluding volatile food and energy items) increased to 6.2% YoY last month versus 5.8% seen in January. The market expectations are for a 5.8% figure.

The monthly figures showed that the UK consumer prices rose to 1.1% in February vs. 0.6% expectations and -0.6% last.

The UK Retail Price Index for February stood at 1.2% MoM and 13.8% YoY, beating expectations across the time horizon.

Additional takeaways (via ONS)

“The largest upward contributions to the annual CPIH inflation rate in February 2023 came from housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages.”

“The largest upward contributions to the monthly change in both the CPIH and CPI rates came from restaurants and cafes, food, and clothing, partially offset by downward contributions from recreational and cultural goods and services (particularly recording media), and motor fuels.”

FX implications

In an initial reaction to the UK CPI numbers, the GBP/USD pair jumped to session highs of 1.2264 before retreating to 1.2245, where it now wavers. The pair is up 0.29% on the day.

GBP/USD: 15-minutes chart

Why does UK inflation matter to traders?

The Bank of England (BOE) is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase in interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

Author

FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

GBP/USD declines to near 1.3500 as US-Iran tensions rise

The GBP/USD pair declines to near 1.3500 during the early European trading hours on Wednesday. Ongoing tensions in the Middle East provide some support to a safe-haven currency such as the US Dollar against the British Pound. All eyes will be on the US August jobs report later on Friday.

EUR/USD weakens below 1.1600; further consolidation cannot be ruled out

The EUR/USD pair loses traction to near 1.1575 during the early European session. The US Dollar strengthens against the Euro amid hawkish Federal Reserve stance and escalating Middle East geopolitical tensions. Traders will keep an eye on the Eurozone Retail Sales and US employment data, which are due on Friday.

Gold: Hawkish Fed prospects drag further below $4,300

Gold extends its decline on Wednesday, facing enormous pressure due to surging United States Treasury Yields and rising oil prices. In Asian trade on Wednesday, 10-year US Treasury Yields hit a record high at 4.81%, the highest level seen since November 2023. In Wednesday’s session, investors will keep an eye on the US ADP Employment Change data for August.

WTI advances to mid-$90.00s, fresh high since July 24 amid escalating US-Iran tensions

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – scales higher for the third straight day – also marking the fifth day of a positive move in the previous six – and climbs to a fresh high since July 24 during the Asian session on Wednesday.

Top 3 Price Prediction: BTC, ETH, XRP under pressure as momentum indicators flag early bearish signals

Bitcoin, Ethereum, and Ripple remain under pressure, with technical indicators suggesting early weakening momentum across the top three cryptocurrencies following massive gains in August. BTC shows early bearish signals, while ETH has extended its pullback after rejection near $2,500. Meanwhile, XRP is consolidating below key support, keeping the outlook cautious.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.