The British pound is
retreating as headline CPI inflation fell short of expectations: the
annual pace is only 4.2%, lower than 4.5% that was expected. Also other
inflation figures fell short.
GBP/USD is now just above 1.58, falling from 1.5840 before the release. It already dropped to 1.5780 in the initial reaction.
Core CPI dropped under the important 3%. Instead of ticking up from 3.3% to 3.4%, it dropped to 2.8%. The Retail Price Index (
RPI) slid to 5% from 5.2%.
Also in Britain, trade balance disappointed with a high deficit of
8.5 billion, much higher than 7.3 that was predicted. This adds to the
pound's misery.
The current situation of the British economy is dire. A very extraordinary rise in prices is necessary for
a rate hike. British policymakers know that the main reason for inflation is high
commodity ,
and not internal demand. A hike will depress the fragile growth even
further. With this weak figure, there is no pressure for a hike anytime
soon, probably not in a year's time.
British
inflation
took a on month breather and dropped to a pace of 4% a few months ago,
but this was short lived. Headline CPI returned to the 4.5% level.
The difference that was seen last month, was that the other inflation numbers, Core CPI and RPI, eased, allowing the pound to slide.
GBP/USD traded at around 1.5840 before the release. The pound was
significantly hurt by the debt crisis in Europe, sending it yesterday
below the 1.5910 support line.
Minor support is at 1.5820, followed by more important support at 1.5750. Resistance is at 1.5910, followed by 1.5940.
For more on the pound, including technical levels and upcoming events, see the
British Pound forecast.
The British pound is
retreating as headline CPI inflation fell short of expectations: the
annual pace is only 4.2%, lower than 4.5% that was expected. Also other
inflation figures fell short.
No comments:
Post a Comment