Pound Advances As U.K. Inflation Accelerates To 10-year High
November 16 2021 - 11:03PM
RTTF2
The pound drifted higher against its major counterparts in the
European session on Wednesday, as the nation's inflation soared to
a 10-year high in October, adding to hopes for a rate hike by the
Bank of England next month.
Data from the Office for National Statistics showed that UK
inflation accelerated more than expected in October.
Consumer price inflation advanced to 4.2 percent from 3.1
percent in September. The rate was forecast to climb to 3.9
percent.
The upward pressure was largely driven by the surge in the cost
of housing and transport.
On a monthly basis, consumer prices were up 1.1 percent versus
September's 0.3 percent rise and economists' forecast of 0.8
percent.
Core inflation that excludes energy, food, alcoholic beverages
and tobacco, rose to 3.4 percent in October from 2.9 percent in
September. The expected rate was 3.1 percent.
Another report from the ONS showed that output price inflation
increased to 8 percent from 7 percent in September. This was also
above economists' forecast of 7.3 percent.
Similarly, input prices advanced at a pace of 13.0 percent
annually, following the 11.9 percent increase a month ago.
Month-on-month, output prices gained 1.1 percent compared to a
0.7 percent rise in September. Economists had forecast prices to
increase 0.8 percent.
At the same time, input prices climbed 1.4 percent on month
after a 0.8 percent rise in the previous month. The expected rate
was 1.1 percent.
The latest data is likely to add pressure on BoE policymakers to
lift interest rate at its meeting in December.
The GBP/JPY pair touched nearly a 2-week high of 154.74, up from
Tuesday's close of 154.16. The pound is seen finding resistance
around the 156.00 level.
The GBP/CHF pair jumped to its highest level since October 29,
at 1.2547. The pair had closed yesterday's trading at 1.2476. The
pound may challenge resistance around the 1.28 level, if it rises
further.
The GBP/USD pair recorded a weekly high of 1.3474 following the
data, after touching a 5-day low of 1.3396 at 10:30 pm ET. The
pound is likely to find resistance around the 1.37 level.
The EUR/GBP pair dropped to 0.8389, a level unseen since
February 2020. At yesterday's close, the pair was valued at 0.8426.
Next key resistance for the pound is seen around the 0.82
level.
Looking ahead, Eurozone CPI for October and construction output
for September are due in the European session.
Canada CPI and U.S. housing starts and building permits, all for
October, are scheduled for release in the New York session.
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