Home Daily Commentaries The Pound finds buying interest on UK inflation data

The Pound finds buying interest on UK inflation data

Daily Currency Update

The pound showed little reaction but recovered slightly against the US Dollar on the release of inflation figures for the UK. The Office for National Statistics data released on Wednesday showed that the UK’s Consumer Price Index rose at an annual pace of 6.7% in September. The data exceeded the market expectations of a 6.5% rise. The UK Retail Price Index for September also rose 0.5% month on month and 8.9% year on year matching expectations.

The Pound remains defensive against the US Dollar after data from the UK yesterday showed that UK wages are decelerating. Strong Retail Sales report in the US also weighed on Sterling. Employment data from the UK showed that wages came slightly below estimates with August data revised upwards. Reinforcing views from investors that the Bank of England is near or finished its interest rate hiking cycle. In the latest Central Bank meeting the Bank of England decided to remain unchanged on interest rates even though inflation levels remain higher than the current target.

US Retail Sales in September showed US consumers remained resilient with data beating the forecasted reading. Even though the Federal Reserve has raised its interest rates by 525bps. Speculation from investors is that this could convince the US Federal Reserve to raise rates further at their December meeting which could strengthen the US Dollar. Richmond Fed President Thomas Barkin highlighted the US central bank's restrictive policy while confirming he was uncertain where rates would be three weeks from now.

Key Movers

Today GBP/USD remains vulnerable to data and speeches from key members of the US Federal Reserve. US building permits release expected to come in at 1.45m, US Housing starts deviations on the figures could see volatility in the GBP/USD. Later in the US, Federal Reserve speakers could provide an indication of the US economic performance.

Expected Ranges

  • GBP/USD: 1.2158 - 1.2210 ▲
  • GBP/EUR: 1.1509 - 1.1538 ▲
  • GBP/AUD: 1.1544 - 1.1509 ▼
  • EUR/USD: 1.0560 - 1.0593 ▼