The latest in our series of previews looks at the UK inflation data for Sept all due at 08.30 GMT today
Here's what the market is expecting:
Last month the ONS cited lower oil prices pushing down on motor and heating fuel, while clothes prices are rising less than a year ago
Oil prices are trending higher, by and large, at the moment but that will not have filtered through into the latest data or indeed for a while yet. While we might expect 0% CPI mm or even a negative number we must take a big look at the Core CPI figure. A drop in that and the BOE really will have to raise their concern level.
You can read the latest BOE inflation report here
It's possible, but highly unlikely, that we might see a stronger number and that will give hope to the GBP bulls and the market once again is likely to have priced in a soft number so the risk could still be to the topside if data comes in better than expected
I expect GBP rallies to be sold again though on a soft/as expected reading as it will reiterate there will be no BOE rate hike anytime soon. BOE gov Carney last week said that he wasn't reliant on the Fed before hiking as I reported here, but I see the reality as being somewhat different.
GBPUSD currently 1.5317 with good demand at 1.5300 holding so far but with offers around 1.5350 and between 1.5380-1.5410. EURGBP similarly in a tight range at 0.7420 with bids around 0.7400 holding so far. Good offers between 0.7430-60. Yesterday I once again highlighted the correlation of these pairs
Consider also that MPC members Vlieghe and McCafferty will be in front of the parliamentary Treasury Select Committee from 09.00 GMT and that might temper any GBP selling initially
As always, trade what you see on/after the data and don't over analyze.
