Yesterday’s upside surprise in UK October inflation numbers gave sterling a reason to rally. The massive leap from 3.1% in September up to 4.2% in October caught many economists by off-guard. Energy prices lead the way higher but core goods such as clothes and travel rose too. The consensus was for a move up to 3.9% with even the most hawkish Bloomberg estimate only coming in at 4.1%. This fresh data suggests the December Bank of England meeting is a live one, with economists predicting a 15 basis point increase up to 0.25%.
The pound pushed back towards $1.35 against the US dollar and €1.19 against the shared currency. By the afternoon session, sterling had managed to breach the €1.19 level, pushing to its highest level since February 2020.
Today sees mostly US data on the economic calendar which includes initial jobless claims and a Philadelphia manufacturing gauge. There will also be some central bank speakers from the Fed and European Central Bank.
Written by Viv Savani. 6:37am, November 18th 2021
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