Pound plummets due to UK CPI

Note: This section contains information in English only.
Source: Dukascopy Bank SA


On Wednesday, at 07:00 GMT, the United Kingdom Office for National Statistics released the country's Consumer Price Index data. The event caused a major drop of the Pound against peer currencies.

The market consensus forecast was that inflation in the United Kingdom had declined from 4.6% to 4.3%. However, the actual inflation was even lower, as CPI had increased by 3.9% on an annual basis. The data signals that the Bank of England's policy has been more effective than expected and the central bank can cut interest rates. Lower interest rates would result in less demand for the Pound.

The GBP/USD reacted to the news with a drop from1.2710 down to the weekly simple pivot point at 1.2656 or a move of 55 points or 0.43%. However, after half-an-hour the support level was pierced, as the pair started to consolidate in the 1.2650/1.2670 range.
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