Ekonomické zprávy

European session review: GBP weakens after UK’s January CPI data

TimeCountryEventPeriodPrevious valueForecastActual
07:00United KingdomRetail Price Index, m/mJanuary0.6%-0.2%0%
07:00United KingdomProducer Price Index - Input (MoM)January-1.1%0.2%-0.1%
07:00United KingdomProducer Price Index - Input (YoY) January16.2%14.7%14.1%
07:00United KingdomProducer Price Index - Output (YoY) January14.6%13.3%13.5%
07:00United KingdomProducer Price Index - Output (MoM)January-0.8%0.1%0.5%
07:00United KingdomHICP ex EFAT, Y/YJanuary6.3% 5.8%
07:00United KingdomRetail prices, Y/YJanuary13.4%13.2%13.4%
07:00United KingdomHICP, m/mJanuary0.4%-0.4%-0.6%
07:00United KingdomHICP, Y/YJanuary10.5%10.3%10.1%
09:00FranceIEA Oil Market Report    
10:00EurozoneTrade balance unadjustedDecember-11.7-12.5-8.8
10:00EurozoneIndustrial Production (YoY)December2.8%-0.7%-1.7%
10:00EurozoneIndustrial production, (MoM)December1.4%-0.8%-1.1%

GBP depreciated against most of its counterparts in the European session on Wednesday as investors digested the latest UK inflation report, which revealed the consumer price index (CPI) dropped more than expected in January.

The Office for National Statistics (ONS) reported the annual inflation rate in Britain jumped 10.1% in January 2023, decelerating from 10.5% in December 2022. That was the lowest reading since September 2022. Economists had expected the inflation to slow to 10.3%. Meanwhile, annual core inflation, which excludes volatile food, energy, alcohol and tobacco prices, cooled to 5.8% in January from 6.3% in the previous month. Economists had predicted 6.2%. The most noteworthy revelation, however, was a sharp easing in services inflation, which is closely watched by the Bank of England. According to ONS, inflation in the services sector slowed to 6.0% from 6.8%.

The January decline in inflation - the third one in a row - justified the BoE’s latest projections, suggesting a sharp fall back in inflation from its current very elevated level. Following the February meeting, at which a 0.50-percentage-point rate hike was approved, the British central bank unveiled that it expects the annual CPI inflation to around 4.0% towards the end of this year. Also, the BoE indicated that its current tightening cycle could be near the end but pledged to continue to monitor indications of persistent inflationary pressures, including the labour market’s tightness, wage growth and services inflation, and to tighten its policy further if more persistent pressures are evident. 

The latest inflation data heightened expectations that the BoE is to pause its rate increases after a smaller 0.25-percentage-point hike in March.

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