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Sterling gets a boost from better than expected CPI

  • CPI (y/y) - Survey: 4.2%   Actual: 4.5%   Prior: 4.0%
  • RPI (y/y) - Survey: 5.3%   Actual: 5.2%   Prior: 5.3%
  • Core CPI (y/y) - Survey: 3.4%   Actual: 3.7%   Prior: 3.2%

Seen below, the GBP/USD which had been trading continually higher is testing the 38.2% retracement line on the last hourly move.


U.K Production Data

  • Manufacturing Production (m/m) - Survey: 0.3%   Actual: 0.2%   Prior: 0.0%
  • Industrial Production (m/m) - Survey: 0.9%   Actual: 0.3%   Prior: -1.2%

The GBP sold off accross the board, losing 30+ pips against the USD. The pair currently trades off session lows.

BOE’s King

  • MPC expects recent softness in activity to prove temporary.
  • Risk that high inflation will push up CPI expectations.
  • MPC needs to focus on the medium term.
  • Bank rate has been so low partly because of the gap between the Bank rate and commercial banks funding costs.
  • Hops that the fall in bank funding spreads will allow BOE rates to rise.
  • Low money supply growth is dampening consumer spending and inflation.
  • Stable exchange rate is a good thing.
  • We are not helpless at all but cannot do much to offset short term inflation movements.

UK PPI stronger than expected, GBP gains

  • PPI input (m/m) - Survey: 1.6%   Actual: 2.6%   Prior: 3.7%
  • PPI output (m/m) - Survey: 0.7%   Actual: 0.8%   Prior: 0.9%

UK construction PMI 53.3

  • Net lending to individuals: 0.5B
  • Final mortgage approvals: 48K
  • M4 money supply: 0.1%

GBP sold on the release.

Cable testing 1.64902

After selling off following a bad manufacturing PMI number, the GBP/USD is currently testing 1.64902 where we saw some support a week ago. Further lower we find 1.64661 and then a full retracement at 1.64333.


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