London, United Kingdom – The UK inflation rate held steady at 6.7 percent in September 2023, the same as in August but slightly down from 6.8 percent in July, according to data released by the Office for National Statistics (ONS). The Consumer Prices Index including owner occupiers’ housing costs (CPIH) also rose by 6.3%, the same rate as in August.
The largest downward contributions to the monthly change in both CPIH and CPI annual rates came from food and non-alcoholic beverages, where prices fell on the month for the first time since September 2021, and furniture and household goods, where prices rose by less than a year ago.
Impact on the Market
Despite the steady UK inflation data, the GBP/USD pair is currently consolidating with modest daily losses due to the strength of the US Dollar. The technical outlook is yet to point to a build up of bullish momentum but additional gains could be seen if the pair starts using 1.2200 as support.
GBP/USD Daily Chart
On the other hand, the Euro (EUR) experienced a decline against the Pound Sterling (GBP) today, with the EUR/GBP pair opening at 0.8680 and falling to an intraday low of 0.8660 before rebounding to 0.86701.
EURGBP Daily Chart
Rising Fuel Prices
Rising prices for motor fuel made the largest upward contribution to the change in the annual rates. The stubborn inflation figures come as petrol prices continue to rise, contributing significantly to the inflation rate.
Official Statements
Commenting on the inflation report, British Finance Minister Jeremy Hunt stated, “as we have seen across other G7 countries, inflation rarely falls in a straight line, but if we stick to our plan then we still expect it to keep falling this year.
Outlook for the Future
Although the latest CPI numbers are not strong enough to cause markets to start pricing in a Bank of England (BoE) rate hike at the November meeting, investors could reassess whether the BoE is done with its tightening cycle and help Pound Sterling stay resilient against its rivals in the near term.
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