Eightcap analyst after UK CPI: It is an interesting position now for the Bank of England., do they need to go back to a few 50-point hikes to cut into the CPI rate?
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One of today's morning key events was the release of the UK CPI which came in at 10.1% beating expectations. We asked Joe Jeffries from Eightcap to share his thoughts on the UK inflation print. Joe decided to deliver us with an insightful view on the British pound situation as well.
We feel that the BOE will have to continue to hike rates and watch if CPI can finally dip below the 10% point
Joe Jeffries (Eightcap): UK CPI beat expectations coming in higher at 10.1% above the 9.8% expected. While this level is below last month's 10.4% it still maintains the 10% and over level. Yes, CPI has decreased from its 11.1 Nov 22 peak, but the number remains above 10% and that's a stubbornly high figure when you compare it to other economies. The US for instance has seen a drop after taking action. So far the issue for the UK is that action hasn't delivered the desired result of a decline in the CPI figure. It is an interesting position now for the Bank of England., do they need to go back to a few 50-point hikes to cut into the CPI rate? Can an already struggling UK economy handle further 50-point hikes? We feel that the BOE will have to continue to hike rates and watch if CPI can finally dip below the 10% point.
British pound
Joe Jeffries (Eightcap): The GBP while boosted by the policy in the short term will continue to be subject to the USD influence. If the USD does weaken over time and the policy for the BOE remains hawkish we should continue to see the GBP appreciate. The GBPUSD saw a choppy start to 2023 but so far holds a 3.28% gain since the start of the year.
Read next: UK inflation goes above 10% seventh time in a row. Core inflation hit 6.2%| FXMAG.COM
