Deutsche Bank now sees the Bank of England keeping rates unchanged at 5.25% on Thursday. They previously saw an increase of 25 basis points.
The UK’s inflation rate unexpectedly slowed, leading to speculation that the Bank of England (BoE) might pause its interest rate hikes when they meet on Thursday.
August’s consumer price index dropped slightly to 6.7% versus 6.8% last month and 7.0% expectations. Factors like reduced hotel prices and airfares contributed to the slowdown, but were offset by rising global fuel prices and alcohol taxes.
Despite the drop, the UK’s inflation remains high in Western Europe. Recall that the European Central Bank recently increased its rates, while the U.S. Federal Reserve is expected to hold steady later today.
The GBPUSD initially moved lower after the CPI data, but has since rebounded and more recently broke above its 100-hour moving average at 1.2393. The high price reached 1.24093. The price is currently trading right at the 100-hour moving average level. A move back below that level with momentum would tilt the bias back to the downside on the failed break.
This article was written by Greg Michalowski at www.forexlive.com. Source