CPI (YoY) (U.K.)
Declining Trend for UK Inflation
Starts Tuesday, August 21, 2018 at 17:40
Updated Wednesday, August 15, 2018
Inflation shoot higher in UK in spring last year and it peaked at 3.1% YoY in December last year. Although, it has cooled off since then and it has formed a bearish trend, but at 2.4% it remains above the BOE 2% target. Last month inflation was expected to jump by 0.2% to 2.6% but it remained unchanged, so there's is a possibility that this month we might see another miss. I don't think if there is a 0.1% deviation from expectations but with Brexit getting ever more complicated, the bias is on the downside for GBP.
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About CPI (YoY) (U.K.)
U.K. CPI (MoM) is a primary measurement of inflationary pressures facing the GBP. It is derived and presented by the National Statistics Bureau, a governmental entity. U.K. CPI (MoM) is a comparison of retail prices facing a typical basket of goods and services, compared on a month-over-month basis. Monetary policy decisions, trade balance, and consumer confidence are sensitive to CPI. Currency markets involving the GBP are receptive to a growing CPI, as it is a signal of inflation. As inflationary pressures grow or reside, the Bank of England (BOE) crafts monetary policy accordingly. High CPI values are often viewed as a precursor for tightening monetary policy toward the GBP, while low readings are conducive to a dovish tone.U.K. CPI is capable of swaying GBP valuations dramatically. Strong values lead to bullish participation for the GBP and lagging CPI facilitates bearish price action.