After the release of the U.K consumer inflation data, the British pound traded lower while the euro remained steady in the late session. Disappointing the analysts’ expectations, the inflation figures just remained steady as the decision of Britain to the leave the European region seemed to haunt the global market even stronger.

As of 15:55 UTC, the pound declined 0.82 percent or 0.0109 against the greenback to trade at 1.3223 while the euro gained 0.02 percent against its U.S. counterpart to 1.238. The U.S. dollar found a slight recovery against a basket of currencies despite the mixed comments from the Fed officials.

Before the release of the data, the pound was already down by 0.15 percent, an extension of a rough week recently. The currency was greatly challenged as the Bank of England remained indecisive on its monetary policy rate.  However, it found a short breathing moment as the British economy was thought of recovering after Brexit.

Currency Outlook

The GBP will still be under great pressure as the investors await for the economic data to be disclosed until the end of the week. Investors have become anxious since the central banks could not release a definite plan on their respective monetary policies. Even the other currencies were prone from fluctuations as cash rate and economic recovery disturb the global financial market.


An expert from Credit Agricole shared “Sterling may be less sensitive to potential positive surprises and vulnerable to losses in the event of data disappointments ahead of the BoE meeting. Indeed, we suspect that the MPC will likely stick to its very cautious assessment of the economy and fairly dovish policy outlook despite the latest more upbeat activity data.”

Further, this is what Citi Currency Strategist Josh O’Byrne has to say “We doubt sterling moves on inflation data will stick. The (BOE's) Monetary Policy Committee have indicated a preference for first stabilising demand and a willingness to overshoot the 2 per cent (inflation) target.”

UK Inflation Steady

Based on the data released, the consumer price index remained by 0.6 percent in August, disappointing the market expectation of 0.7 percent jump after the sterling fell for successive sessions. The ramp up food prices and air fares were just some of the factors which hindered the highly awaited climb of inflation.


Further, the retail price index declined from 1.9  percent in July to 1.8 percent in August. The Office for National Statistics reported that the there was a little indication regarding the transfer of depreciation of the sterling being poured to consumer prices after the feared impact of Brexit.

Capital Economics UK economist Scott Bowman explained “"Consumer price index inflation. Should resume its upward journey in coming months. The effects of sterling's recent fall on import prices will gradually feed through to consumer prices, while the contribution from the previous falls in commodity prices will continue to wane.”

Mike Prestwood, head of inflation at the ONS almost had the same view on the matter. Mr. Preswood noted that the raw materials costs have risen for  the second month running, partly due to the falling value of the pound, though there is little sign of this feeding through to consumer prices yet.

As of writing, here’s the British Pound’s exchange rates:

EUR/GBP             0.85026

GBP/CHF             1.28447

GBP/JPY               135.277


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