The British Pound Sterling slid on Tuesday November 15, as UK inflation data surprises pundits by actually falling back below 1%, PoundSterlinglive reports.
GBP is on the back-foot as foreign exchange markets react to an unexpected slowdown in UK inflation. UK annualised inflation has fallen back to 0.9% in the month of October, down from September’s reading of 1%.
Analysts had forecast a reading of 1.1% as the impact of a weaker Pound started to make itself increasingly felt on shop-floor prices.
“News that inflation declined in October will come as a surprise to many analysts who had been predicting a rise towards the Bank of England’s much-touted two percent target,” says Dennis de Jong, Managing Director at UFX.com. “While the decline will ease pressure on consumers, Governor Mark Carney will be eager to find a way to spur growth against a backdrop of financial uncertainty.”
The impact on an already struggling Sterling was notable.
“The GBPUSD sold off to 1.2414 following the unexpectedly soft inflation data. Cable is set for a deeper correction to 1.2350 for a head-and-shoulders formation following last Friday’s peak at 1.2673. The daily MACD has flattened, which should prevent GBP-longs from picking up enough momentum for a renewed attempt to 1.2840 (100-day moving average),” says Ipek Ozkardeskaya at London Capital Group.
The GBPEUR meanwhile remains stuck just above the 100 day moving average at ~1.1520, the level could provide support. Indeed, those hoping for the recovery to extend will require this level to hold.
