Trade Desk Thoughts - U.K. CPI

U.K. CPI Actual 4.7%, Expected 4.6%, Previous 4.4%
U.K. Core CPI Actual 2.0%, Expected 1.9%, Previous 1.9%

Release Explanation: The CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore gives an overall read of Inflationary pressures. It is the most widely used Inflation indicator of Central Banks, Institutions, and Governments. It is used to calculate Cost of Living numbers for Government programs. Each regional Central Bank will have their own CPI Target rate, and each will differ in line with the way they individually want to control the aspects of their own economies.

Trade Desk Thoughts: Inflation in the U.K. has risen to 4.7% from one year earlier, higher than the market had expected. At the same time, the Core CPI was released at 2.0%, higher than what was forecasted. The largest upward pressure came from housing and household services. There was a large, partially offsetting, downward effect from the price of heating oil, following a decrease in the price of crude oil. Food and non-food items also added upward pressure on the inflation read. At the same time, the average price of petrol fell by 5.5 pence per liter between July and August this year.

Forex Technical Reaction: The pound fell 30 pips soon after the release. The pair is now testing the support area of the range it traded in during the overnight session

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