The United Kingdom (UK) headline\u00a0Consumer Price Index\u00a0(CPI) rose 3.3% over the year in March, compared to a rise of 3.0% in February, the data released by the Office for National Statistics (ONS) showed on Wednesday.\u00a0<\/p>\n
Markets predicted a 3.3% growth in the reported period. The UK inflation<\/a> reading was well above the Bank of England\u2019s (BoE) 2% inflation target.<\/p>\n The core CPI (excluding volatile food and energy items) climbed 3.1% year-over-year (YoY) in the same period, compared to February\u2019s 3.2% print and came in below the forecast of 3.2%.<\/p>\n Meanwhile, the monthly UK CPI arrived at 0.7% in March versus a rise of 0.4% reported in February, above the market consensus.<\/p>\n GBP\/USD reaction to the UK CPI inflation data<\/p>\n The UK CPI\u00a0inflation data fails to boost the Pound Sterling (GBP). At the time of writing, the\u00a0GBP\/USD pair is trading 0.08% higher on the day to trade at 1.3518.<\/p>\n Pound Sterling Price Last 7 Days<\/p>\n The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the Euro.<\/p>\n USDEURGBPJPYCADAUDNZDCHFUSD0.40%0.39%0.29%-0.80%-0.70%-0.27%-0.16%EUR-0.40%-0.05%-0.13%-1.21%-1.02%-0.66%-0.57%GBP-0.39%0.05%-0.15%-1.16%-0.96%-0.59%-0.52%JPY-0.29%0.13%0.15%-1.09%-0.92%-0.54%-0.41%CAD0.80%1.21%1.16%1.09%0.16%0.55%0.65%AUD0.70%1.02%0.96%0.92%-0.16%0.34%0.43%NZD0.27%0.66%0.59%0.54%-0.55%-0.34%0.11%CHF0.16%0.57%0.52%0.41%-0.65%-0.43%-0.11%<\/p>\n The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)\/USD (quote).<\/p>\n This section below was published at 05:24 GMT as a preview of the UK Consumer Price Index (CPI) inflation data.<\/p>\n The United Kingdom\u2019s Office for National Statistics will publish the March CPI data on Wednesday.The annual UK headline inflation is set to pick up in March, while growth in core CPI is seen stabilizing.The UK CPI data could trigger a big reaction in the Pound Sterling amid receding BoE interest rate hike bets.<\/p>\n The United Kingdom (UK) Office for National Statistics (ONS) will publish the high-impact Consumer Price Index (CPI) data for March at 06:00 GMT.\u00a0<\/p>\n The report could significantly alter market expectations about a Bank of England (BoE) interest rate hike later this year, ramping up volatility around the Pound Sterling (GBP), as traders brace for the impact of the energy shock from the Middle East war.\u00a0<\/p>\n What to expect from the next UK inflation report?<\/p>\n The UK Consumer Price Index is expected to rise 3.3% year-over-year (YoY) in March, following a 3% increase in February. The reading is likely to come in above the BoE\u2019s projection of 3%, moving further away from its 2% target.<\/p>\n Core CPI inflation, which excludes energy, food, alcohol, and tobacco prices, is expected to hold steady at 3.2% YoY in the reported period.<\/p>\n According to industry experts, official data is expected to show that service inflation remained stable at 4.3% YoY in March.<\/p>\n Meanwhile, the British monthly CPI is seen rising by 0.6% in the same period after a 0.4% growth in February.<\/p>\n “We expect headline inflation to rise to 3.3% year-over-year from 3.0%, driven by the energy supply shock, while core inflation is expected to hold at 3.2%, matching February and in line with consensus expectations. This would mark a significant reversal in the progress toward disinflation seen in the U.K. through February and is likely to persist for several months, \u201c Wells Fargo said in a research note ahead of the data release.\u00a0<\/p>\n How will the UK Consumer Price Index report affect GBP\/USD?<\/p>\n It\u2019s the inflation print that covers the first monthly period data after the United States (US) and Israel launched airstrikes on Iran in late February, prompting retaliatory strikes by the Iranian Republic and leading to higher energy costs, particularly for Oil. Therefore, an uptick in headline British inflation, both monthly and annual, is well anticipated.<\/p>\n However, markets may consider this a one-off, as what would matter the most for the BoE<\/a> when deciding on interest rates<\/a> are the so-called second-round effects on core inflation from the war impact.<\/p>\n Speaking on the energy shock-led inflationary pressures, in a speech on April 14, BoE policymaker Megan Greene said that \u201cwe won’t have definitive evidence of second-round effects for a while, it could take months.\u201d<\/p>\n She further noted that \u201cwe can’t just look through negative supply shocks; the view needs to be more nuanced.\u201d<\/p>\n \u201cThe swaps curve has slashed BoE rate hike bets over the next twelve months from as much as 100 basis points (bps) on March 26 to 25 bps currently. BoE rate hike bets should ease further given excess slack in the economy. The BoE estimates a negative output gap of -1% of GDP<\/a> in 2026,\u201d BBH Analysts noted.<\/p>\n The latest labor data published by the Office for National Statistics (ONS) showed annual growth in regular earnings, excluding bonuses, slowed less than expected to 3.6% in the three months to February from 3.8% previously, while the Unemployment Rate unexpectedly fell to 4.9% in the three months to February, from 5.2% in January, and lower than estimates of 5.2%.<\/p>\n With signs of stabilization in the UK labor market and higher inflation projections, the March CPI data will be critical to keeping bets alive for a BoE rate hike this year.<\/p>\n A surprise uptick in the core CPI and services inflation could double down on hawkish BoE expectations. In such a case, the Pound Sterling will receive the much-needed lift, driving GBP\/USD<\/a> back toward the 1.3600 barrier. Conversely, an unexpected slowdown in core readings could push back against BoE rate hike bets, weighing negatively on the pair.<\/p>\n Dhwani Mehta, Asian Session Lead Analyst at FXStreet<\/a>, offers a brief technical outlook<\/a> for the major and explains: \u201cGBP\/USD is defending the triple top breakout resistance-turned-support near 1.3485, with the 14-day Relative Strength Index (RSI) momentum indicator holding well above the 50 level.\u201d<\/p>\n \u201cThe pair needs acceptance above the 1.3600 round level to break the consolidative mode, paving the way toward the 1.3700 threshold. The next topside target is aligned at the February high of 1.3732. On the flip side, the immediate support is seen near 1.3485, below which the 1.3415 area could challenge bullish commitments. That zone is the confluence of the 50-day Simple Moving Average (SMA) and the 200-day SMA. Further down, the 21-day SMA at 1.3384 will be the level to beat for sellers,\u201d Dhwani adds.<\/p>\n Inflation FAQs<\/p>\n Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.<\/p>\n The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.<\/p>\n Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money. <\/p>\n Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
\nHigher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.<\/p>\n","protected":false},"excerpt":{"rendered":"The United Kingdom (UK) headline\u00a0Consumer Price Index\u00a0(CPI) rose 3.3% over the year in March, compared to a rise…\n","protected":false},"author":2,"featured_media":258800,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":{"0":"post-391687","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/391687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=391687"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/391687\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/258800"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=391687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=391687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=391687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}