GBP/USD Little Changed As UK Inflation Edges Back Above Zero

The British Pound was little changed versus the US Dollar (at the time this report was written) after the UK’s Consumer Price Index (CPI) rose above negative territory for the first time in four months. The figures came generally in line with expectations, with the headline reading printing an annual rise of 0.1% percent, as expected, which was above the October negative -0.1% figure. The month on month figure came slightly above expectations by printing 0.0%, above the expected -0.1%, but below the prior 0.1%. Core CPI, which excludes volatile factors such as food, energy, alcohol, and tobacco, rose to 1.2% from the prior 1.1%, as was expected by economists.

CPI readings are a key measure for the BoE in deciding when to begin raising interest rates. While the figure rose above zero for the first time in four months, headline CPI is far from the BoE’s inflation target of 2%, and the figures today did little to sway the markets sentiment in regards to the BoE’s next rate move.

DailyFX Currency Strategist Ilya Spivak mentioned earlier today that an outcome generally within expectations would only underscore the long way that inflation has to go to come within striking distance of the BOE’s target, which may have little effect on the British Pound.