Drawdown in sterling for both GBP/USD and GBP/EUR as UK CPI reaches 10.1% YoY
A rise in food prices has been mostly responsible for the climb in consumer price inflation. Food and non-alcoholic price rises are at 14.6%, levels not seen in 40 years. Both GBP/USD and GBP/EUR have seen a drawdown in sterling.
(Video Transcript)
Inflation at four decade highs
Inflation has risen to its fastest rate in 40 years, with a rise from 9.9 to 10.1% of the consumer price headline rate.
Let's take a look at the figures as we continue to monitor the fallout from the data that we've seen. It's not just consumer prices but also producer prices and retail prices that have risen.
But, it's the headline 10.1% reading in September that takes us back to where we were in July after that slightly lower print in August, but we have been expecting a 10% number. So this is stronger than had been expected, adding to extra expectation that we could well see the Bank of England (BoE) give us a bumper interest rate rise on the 3rd of November.
Food and the non-alcoholic drink have risen by 14.6% in the 12 months through to September, up from 13.1% in the month of August. And it means that prices as I said are rising at this 40-year rate now. The inflation numbers are being driven by food prices mainly.
GBP/USD
If we look at what's been happening on the foreign exchange markets, in fact there's been a second day of declines for sterling.
This is the the daily candle chart showing us a pullback on from yesterday's drawdown. We saw just a slight reversal of what we saw was overall a positive day on the markets for sterling on Monday.
We've seen Jeremy Hunt now come through as the new Chancellor Exchequer, giving some extra hope for sterling off the lows that we saw when we saw that low print back at the lowest point we ever seen since decimalisation back in the early 70's. That was on the 26th of September. Since then, sterling has strengthened.
GBP/EUR
It also strengthened as well against the euro. But in today's session, its down for a fourth day in a row.
But we see it well off the lows that we've seen over the last couple of weeks or so for sterling. But the news out of this today is that we should expect to see further interest rate rises when the Bank of England meets at the beginning of November.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market.
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
