Most UK inflation numbers came out as expected. The annual level of inflation was expected to slide to 1.6% in March after 1.7% in February. and that is exactly what happened. Core CPI was predicted to make the exact same dip. The retail price index carried expectations for a drop from 2.7% to 2.5%. These are the main figures and they all met expectations. The only big surprise is in the HPI: it came out at 9.1% instead of 7.2% expected. This late figure related to housing probably has a stronger impact now that other numbers did not surprise. Together with a dip that preceded the release, the bounce is huge.
GBP/USD was on the back foot towards the publication, struggling to hold on to the 1.67 line and just before the release it went as low as 1.6657. The pair stages a 60 pip bounce back up to 1.6717 at the time of writing.
Producer prices: PPI Input was expected to drop by 0.1% after a slide of 0.4% Â beforehand but the actual result was a bigger drop of 0.6%. PPI Output was estimated to have risen 0.1% after a flat figure and it actually advanced by 0.2%. All the numbers for February are before revisions.
The House Price Index was expected to advance on high ground, from 6.8% to 7.2%. The UK housing sector is steaming hot as the actual rise is 9.1%. It is important to remember that the HPI is a figure for February, not for March like the other numbers. Nevertheless, the surprise is quite big.
Sterling has retreated during this week, mostly because of the dollar’s comeback and the global risk off atmosphere in markets.
1.6668 works as support, and 1.6740 as immediate resistance. For more levels, events and analysis, see the GBPUSD forecast.
