United Kingdom’s Office for National Statistics to Release CPI Report
- Annual UK headline CPI inflation expected to rise in October, with core figure easing slightly
- UK CPI data could signal BoE December interest-rate cut pause, leading to Pound Sterling sell-off
The eagerly anticipated Consumer Price Index (CPI) data for October in the United Kingdom (UK) is scheduled for release by the Office for National Statistics (ONS) on Wednesday at 07:00 GMT. This report holds significant implications for the financial landscape, particularly with regards to the Bank of England’s (BoE) monetary policy decisions and their impact on the Pound Sterling.
What to Expect from the Upcoming UK Inflation Report?
Here are some key points to consider:
- The UK Consumer Price Index is projected to increase by 2.2% annually in October, surpassing the BoE’s 2.0% target after a 1.7% uptick in September.
- Core CPI inflation is anticipated to slightly ease to 3.1% year-over-year in October, down from the previous month’s 3.2%.
- Service inflation is expected to show a slight decrease to 4.8% in October compared to 4.9% in September.
Market analysts from Societe Generale predict that headline inflation could reach 2.2% year-over-year in October, driven by base effects and higher utility prices. Services inflation is also expected to rise to 5% year-over-year, though risks remain skewed to the downside.
Impact on GBP/USD Exchange Rate
The release of the UK CPI data holds the potential to influence the GBP/USD currency pair in the following ways:
- If inflation data exceeds expectations, there may be speculation of a BoE pause in interest rate cuts, leading to a Pound Sterling rally.
- Conversely, softer-than-expected inflation figures could result in a decline in the Pound Sterling, pushing the GBP/USD pair towards the 1.2500 level.
Technical analyst Dhwani Mehta from FXStreet suggests that while GBP/USD is currently in recovery mode, downside risks persist. The Relative Strength Index (RSI) remains below 50, indicating bearish sentiment. A potential Death Cross formation on the daily timeframe further supports a bearish outlook.
Key levels to watch for GBP/USD include a resistance zone around 1.2750, followed by the 200-day Simple Moving Average (SMA) at 1.2820. On the downside, support lies at 1.2597, with potential testing of the 1.2500 level.
British Pound Performance Against Major Currencies
The table below highlights the percentage change of the British Pound (GBP) against key currencies this month:
| USD | EUR | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|
| GBP | -1.65% | 1.00% | 0.22% | -1.45% | -0.90% | -0.57% | 0.54% |
The data indicates that the British Pound experienced varied performance against major currencies, with notable gains against the Euro and a decline against the Canadian Dollar.
Overall, the upcoming UK CPI report is poised to offer valuable insights into the country’s inflation landscape and its implications for monetary policy and currency markets. Investors and traders will closely monitor the data release and its impact on the Pound Sterling to make informed decisions in the financial markets.