BOE Easing Expectations Fall on Fresh UK Inflation Jump
UK Inflation Jumps Again
The British Pound is on watch today after the latest economic data this morning showed UK inflation rising for the first time in five months. Annualised headline CPI hit 3.4% last month, up from 3.2% prior and above the 3.3% the market was looking for. With inflation still well above the BOE’s target and pushing higher again this complicates the picture for the bank near-term and certainly shuts down any chance of a Feb rate cut and offers firm pushback against March easing expectations. Looking at the breakdown of the data, there are some seasonal factors which came into play such as the typical holiday-driven spike in airfares. Additionally, higher duties on tobacco fuelled an uptick in alcohol and tobacco prices. However, rising food prices generally were seen pushing CPI higher also, underscoring the remaining upwards pressures still facing the UK.
Dollar Rising on Trump Volatility
Despite the data, GBP is falling today against the Dollar though this is likely more a function of the rebound we’re seeing in USD today after a sharp drop lower yesterday. For now, the bigger driver remains the ongoing uncertainty around the US pursuit of Greenland. With Trump due to speak later today in Davos, ahead of EU leaders tomorrow, there is plenty of room for fresh volatility this week. For the UK, the threat of fresh tariffs from Trump is a key near-term risk with some signalling UK recession risks if Trump does tariff the UK.
Technical Views
GBPUSD
The failure into yesterday’s highs has seen price reversing back under the 1.3427 level. While below here risks of a deeper push down towards the 1.3264 level are seen, in line with bearish momentum studies readings. Topside, 1.3608 remains the next target if bulls can hold back above 1.3427 near-term.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.