The UK’s Office for National Statistics reported earlier that inflation in the UK was at its highest level since November of 2016, rising to 1.0% in September from August’s 0.6% against expectations of a rise to 0.9%. Core inflation, which excludes fuel and food prices that are deemed volatile, also unexpectedly rose to 1.5% against forecasts of a rise to 1.4% from August’s 1.3%. The news helped the Pound push up versus the US Dollar and the Euro on expectations that UK’s central bank is less likely to lower interest rates further this year.
As of 10:30 am (BST) in London, the GBP/USD was trading up 0.43% at $1.2238; the pair has ranged from a session trough of $1.2173 to a peak of $1.2272. The EUR/GBP was down by 0.28% to trade at 0.9002 Pence, while the session low was at 0.8971 Pence and the high at 0.9039 Pence.
BoE Inflation Target Eyed
Since the June 23rd vote by Britain to withdraw from the European Union, the Pound has lost nearly 20% against the Dollar. Analysts see today’s inflation figures as a factor of the Pound’s change in purchasing power and expect that the latest drop in the Pound isn’t yet reflected in inflation numbers. Last week, the governor of the Bank of England had said that the BoE could tolerate overshooting the 2% inflation target if necessary in order to accommodate growth and employment.