The GBP/USD pair is trading upwards after several reports on the prices.
The British Pound is getting more expensive against the USD based on the statistics relating to the prices in the United Kingdom. The current quote for the instrument is 1.2464; the pair returned to its four weeks’ highs.
The market attention was focused on the inflation readings. The CPI in the country in February expanded by 2.3% y/y after adding 1.8% y/y the month before and against expectations of 2.1% y/y. The Core Inflation Rate added 2% y/y, although it was expected to expands by 1.7% y/y. The RPI skyrocketed even more, by 3.2% y/y against expectations of 2.9% y/y.
The components of the reports indicate that food process in February increased by 0.3% y/y after falling for more than thirty consecutive months. Transport costs also increased due to the rise in fuel prices.
As a result, the British inflation seems to be growing steadily. However, when the inflation grows too fast, it will be as dangerous as when it grows slow. As usual, the truth is somewhere in between. Now it will be pretty interesting to see what measures the Bank of England is going to take in order to keep the CPI at 2%.
The PPI Input in February lost 0.4% m/m after adding 1.6% m/m in January. The PPI Output added 0.2% m/m, which is less than expected.
What is happening to the prices is perfectly describing how efficient the monetary policy of the BoE is. But the target was reached, and no new principles were announced. This is why it’s quite risky, because the growth of the inflation is rather unwanted because of the forthcoming Brexit procedure.
RoboForex Analytical Department