UK Inflation Surges to 6-Month High Impacting GBPUSD

The GBP/USD climbed toward $1.27, moving away from the six-month low it hit last week. This upward movement occurred because the UK’s inflation was higher than expected, making the Bank of England more cautious about cutting interest rates in the future.

UK Inflation Hits 6-Month High at 2.3% in October

In October, the UK’s annual inflation rate rose to 2.3%, up from 1.7% in September. This is the highest rate in six months, surpassing the Bank of England’s target and market predictions of 2.2%. Additionally, inflation in the services sector—viewed by the central bank as a key measure of domestic price pressures—increased to 5% from 4.9%.

• Also read: Yen Plunges to Four-Month Low Amid Policy Woes

As a result of these inflation figures, markets now see only a 14% chance of another quarter-point interest rate cut this year and anticipate just two cuts in 2025. However, the British pound remains under pressure due to the strong U.S. dollar. This strength is linked to expectations that U.S. economic policies might drive U.S. inflation higher, potentially limiting the Federal Reserve’s ability to reduce interest rates.

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Ethan O. Miller

Ethan O. Miller is a seasoned Forex analyst. His insightful articles offer a unique perspective on currency trends, aiding both novice and experienced traders in navigating the Forex market.

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