In the UK, we saw the release of inflation figures which surprised to the upside. CPI rose from 2.5% to 2.7% in August and core inflation was also above expectations at 2.1%. The larger-than-expected pickup could reflect some one-off factors, but is likely above the Bank of England’s expectations which now placed the BoE under the spotlight. This takes the consumer price index even further away from the 2% target of the Bank of England. The Bank of England (BoE) has already raised its interest rate twice inside of the last year, to 0.75%, in order to combat rising levels of inflation and return the consumer price index to the 2% target.
The GBP/USD initially rallied on the back of the news touching a 10-week high of 1.3212 however, quickly lost all gains as headlines in the UK suggested that Prime Minister May is to reject the EU’s offer on the Irish border. An official from PM May’s office confirmed that the UK can’t accept any Brexit offer from the EU that treats Northern Ireland as a separate customs territory. The pair is currently changing hands at 1.3140
Looking ahead the UK is to report on retail sales.
On the technical front, we see initial support at 1.3095 followed by 1.3050, on the upside, resistance lies at 1.3170 and 1.3210.