UK headline inflation came out at 0.3% y/y in February, as expected. This is the highest in around a year, but still at rock bottom. Month over over, it fell short with -0.8%. Perhaps the bigger disappointment came out at 1.2%, worse than 1.3% predicted.
GBP/USD is a bit lower, under 1.45, off from the move it went to beforehand.
More data: PPI Input beat with -0.7% against 1.2%, PPI Output dropped -0.1% against -0.2% and the HPI missed with 6.7% instead of 7.9% predicted.
The UK was expected to report a rise of 0.3% in prices y/y in January, up from 0.2% in December. This reflects the base effects more than anything else. Month over month, a fall of 0.7% was predicted. Core inflation carried expectations for a rise of 1.3% y/y after 1.4% beforehand.
The pound was on the move already before the event with GBP/USD topping 1.45.
Yesterday, the sole hawk that voted for a rate hike, Ian McCafferty, expressed a dovish view: “the case for raising rates is less compelling†and it hurt the pound, even though he had already changed his vote to align with the majority.
Tomorrow we have another top-tier UK event: the publication of the jobs report, where wages will take center stage. And of course, the ongoing talk about the EU referendum is on the cards.
More: GBP: All Eyes On Brussels; Deal Or No Deal – BofA Merrill
