UK Inflation Surges Above Bank Of England's 2% Target
GBP
GBP/USD is trading at 1.2658 (interbank), while GBP/EUR stands at 1.2002 (interbank).
This morning, UK CPI data for October exceeded expectations, casting uncertainty over whether the Bank of England will proceed with a rate cut in December. Consumer prices rose by 2.3% annually, surpassing the 2.2% forecast, with a monthly increase of 0.6%, the largest since October 2022.
Core inflation also ticked up to 3.3% in October from 3.2% in September, defying forecasts of a drop to 3.1%.
These figures come ahead of the anticipated impact of higher corporate taxes announced in the new government’s recent budget.
Furthermore, the data complicates the BoE’s approach to rate adjustments as it continues to target 2% inflation while signalling a cautious, gradual stance.
Today’s Events (GMT):
07:00 - Core CPI (Oct) - Actual: 3.3% vs Forecast: 3.1%
07:00 - CPI Oct) - Actual: 2.3% Forecast: 2.2%
07:00 - PPI Input (Oct) - Actual: 0.1% Forecast: 0.5%
16:00 - MPC Member Ramsden Speaks
EUR
EUR/USD is steady and is currently trading at 1.0555 (interbank).
The ECB is likely to continue reducing interest rates amidst weak regional growth and declining inflation, which has now returned to its target.
Yesterday, ECB policymaker Fabio Panetta suggested yesterday that rates should shift from restrictive to neutral or even stimulative levels as post-pandemic shocks ease.
Moreover, the ECB’s Financial Stability Review warned that "economic growth remains fragile," with policymakers facing persistent inflation alongside imbalances in the broader economy.
President Christine Lagarde is set to address financial stability and macroprudential policy challenges at a conference in Frankfurt later today.
Today’s Events (GMT):
07:00 - German PPI (Oct) - Actual: 0.2% Forecast: -0.1%
09:00 - ECB Financial Stability Review
13:00 - ECB President Lagarde Speaks
18:00 - ECB's De Guindos Speaks
USD
The Dollar Index, measuring the U.S. dollar against a basket of six major currencies, the Dollar Index, is at 106.490, rebounding after hitting a one-week low earlier in the session.
The U.S. dollar continues to gain strength following last week’s peak, bolstered by expectations of fiscal expansion, higher trade tariffs, and tighter immigration policies under Trump’s presidency—all measures considered inflationary.
Geopolitical tensions also supported the dollar after the U.S. Embassy in Kyiv temporarily closed, citing intelligence of a possible large-scale airstrike.
Investors are now turning their attention to comments from Fed official Michelle Bowman, which could offer further clues on the Federal Reserve's monetary policy path.
Today’s Events (GMT):
17:15 - FOMC Member Bowman Speaks
CAD
USD/CAD has declined back below 1.4000 and is currently trading at 1.3993 (interbank).
Canadian inflation data released yesterday saw headline CPI rise to 2.0% YoY in October from 1.6% previously, outpacing forecasts of 1.9%. Core CPI also ticked up to 1.7%, reinforcing expectations that the Bank of Canada may opt for a smaller rate cut than initially anticipated at its December meeting.
Oil prices held steady in Asian trading as investors monitored the evolving Russia-Ukraine conflict, with Brent crude at $73.61 per barrel and West Texas Intermediate crude at $69.80.
Attention now shifts to Canada’s retail sales figures due on Friday, which may provide further insight into the economy’s trajectory.
No significant events are scheduled for today.
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