Home Daily Commentaries UK Inflation Falls Below 2% Target

UK Inflation Falls Below 2% Target

Daily Currency Update

UK inflation has fallen below the Bank of England's 2% target for the first time in three and a half years, signaling a potential shift in the economic outlook. According to the Office for National Statistics, the consumer price index (CPI) dropped to 1.7% in September, down from 2.2% in August.

This decline could lead the Bank of England to reconsider its monetary policy, with interest rate cuts now more likely. Market expectations for a 25 basis point cut at the November meeting have risen to over 90%, which could weaken the pound as traders adjust to the potential shift in rate policy.

Key Movers

In the US, recent data indicating a resilient economy and slightly higher-than-expected inflation for September have led market traders to scale back expectations for a significant rate cut. Traders now assign a 92% probability of a 25 basis point cut at the Federal Reserve's policy meeting on November 7.

Expected Ranges

  • GBP/USD: 1.2935 - 1.3015 ▼
  • GBP/EUR: 1.1885 - 1.1965 ▼
  • GBP/AUD: 1.9375 - 1.9465 ▼
  • EUR/USD: 1.0835 - 1.0905 ▼

Written by

See Wah Li

OFXpert

See Wah is passionate about supporting positive transformations when it comes to managing foreign exchange. As a Senior Currency Consultant at OFX, his goal is to help businesses make informed decisions, alleviate risks, and enhance their currency strategies for success. With over 6 years of experience in the foreign exchange market, See Wah’s strength lies in developing effective solutions to help navigate the complexities of currency fluctuations and mitigate their impacts on business profitability.