| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 07:00 | United Kingdom | HICP, Y/Y | October | 1.7% | 2.2% | 2.3% |
| 07:00 | United Kingdom | HICP ex EFAT, Y/Y | October | 3.2% | 3.1% | 3.3% |
| 07:00 | United Kingdom | HICP, m/m | October | 0% | 0.5% | 0.6% |
GBP advanced against most of its rivals in the European session on Wednesday as the data showed that consumer prices in the UK rose more than expected in October, prompting investors to trim their bets on further rate cuts by the Bank of England.
The Office for National Statistics (ONS) reported the British consumer price index (CPI) increased 2.3% YoY last month, accelerating from 1.7% YoY in September. This represented the highest inflation rate since April and was above both economists’ forecast of 2.2% YoY and the Bank of England’s target of 2% YoY. Meanwhile, the core CPI jumped 3.3% YoY in October after a 3.2% YoY gain in the previous month, also exceeding economists prediction of 3.1% YoY.
Today’s CPI figures caused markets to reduce their bets on the BoE policy easing in the coming months. According to Bloomberg, they now see only two more 25-basis-point rate decreases in 2025 and a 40% probability of the third move. Earlier this month, three rate cuts by the BoE were fully priced.
Investors also digested the latest remarks from the governor of the UK’s central bank Andrew Bailey. In his annual report to the House of Commons Treasury Committee, the BoE’s chief said that he believes that a gradual approach to removing monetary policy restraint will help the central bank to observe how the government’s tax increases play out, along with other risks to the inflation outlook.