UK Inflation

The Pound spiked higher Wednesday after official data showed U.K. inflation rising rapidly during August, placing the put the Bank of England in the spotlight, just as European political leaders descend on the Austrian city of Salzburg for a migration and Brexit-related summit.

The Pound reversed course and sank lower against the Dollar early in the Wednesday session after official data showed the UK consumer price index rising only a fraction during July, when some analysts and economists had penciled in a larger increase. 

The Pound slumped against the US Dollar and Euro Wednesday after official data showed UK inflation surprising on the donwside in June, prompting fresh questions about whether the Bank of England will be able to raise its interest rate in August.

The Euro rose as traders responded to the latest Eurozone inflation data, which showed continental price pressures rebounding out of an earlier trough during the month of May.

We are hearing from a number of foreign exchange strategists that there is a good risk-reward ratio in buying the Pound at current levels amidst expectations for a rebound in the currency following a poor run against a host of competitors.

Inflation data for March has come out softer than markets had expected and the British Pound has promptly fallen back.

The Pound slumped broadly during the morning session Wednesday as markets responded to lower than expected UK inflation figures for March, which may now have placed a question mark over the probability of a May interest rate rise from the Bank of England.

The Pound pared back earlier gains over a basket of developed world currencies Tuesday after Office for National Statistics data showed UK inflation falling faster than was expected in February.

The ONS reports annualised UK inflation for the month of January read at 3.0%, greater than the 2.9% forecast by economists ahead of the release.

Tuesday’s CPI data comes after the Bank of England warned it will need to raise interest rates faster than previously thought if the inflation outlook evolves in line with its most recent forecasts.

The Pound's current rally could halt or be spurred on by the result, says analyst.

Brexit news now takes a backseat as the focus turns back to economic data, with November inflation, wages and the Bank of England front and centre.

The recent rise in inflation to 3.0% represents a peak argue analysts at Bank of America Merrill Lynch who see an extended decline ahead, which could take the Pound with it.

Inflation data out of the UK and Eurozone will form the economic focus for the Pound-to-Euro exchange rate on Tuesday, October 17.

The bounce in inflation now heaps pressure on the Bank of England to consider raising interest rates in order to cool prices rises and add further support to the British Pound

“Operating costs for small firms are now at their highest in four years. Increasing inflationary pressure has coincided with a bruising business rates revaluation and rising employment costs." - FSB.

UK inflation has come in below economist forecasts and are suggestive that the recent increase in prices might be at a turning point.

Those wanting a stronger Pound against the Euro will have been spooked by the recent views coming out of some of the world’s most esteemed research houses.

The UK might just have witnessed peak-inflation, and the Pound doesn't like this development.

The immediate consideration for Pound Sterling today is the release of inflation data for May at 09:30.