UK’s CPI inflation has been on an uptrend and spiked to 2.9% in August (Y-o-Y). BoE’s MPC committee has acknowledged that UK’s inflation is likely to remain above its target and might spike above 3% in October. Though, Mark Carney has been suggesting that higher yearly inflation is solely because of weaker GBP/USD levels. But there are few signs of inflation pick-up on a month-on-month basis, as discussed earlier
UK’s monthly CPI inflation, which is by nature volatile due to seasonality spiked to 0.58% in August. It is note-worthy that month-on-month inflation does not have the benefit of lower cable, hence can be attributed to changing dynamics in the UK economy. Going forward, it seems BoE has to act sooner than later to manage inflationary pressure in economy. Interestingly, Carney himself has acknowledged that Brexit would be inflationary in nature amid changing labor market dynamics.
GBPUSD Chart:
Technically, GBP/USD pair has given a clear break-out from channel close to 1.3400 levels and also broken previous high of 1.3450-70. The pair can be bought at current levels of 1.3480-1.3490 range with tight stop loss at 1.3435 level. First target would recent high of 1.3610 and next target of 1.3680, last seen in June 2016
Source: Bank of England
Bloomberg
Office of National Statistics
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