UK Pound Slips as Inflation Falls Short of the Bank’s Big‑Dreams
The pound took a little tumble after the UK’s Consumer Price Index (CPI) hit a 1.7% reading – the lowest since April 2021 and a clear head‑butt to the Bank of England’s 2% target.
Why the Drop Matters
- Inflation’s slide paired with slower wage growth seems to be nudging the BoE toward a more dovish stance.
- Market chatter is picking up the scent that the central bank might slash rates at its next meeting on November 7.
Sterling Vs. the Dollar: A Tug‑of‑War
With rates likely to drop, the pound is feeling less shiny compared to the dollar, which is flexing close to two‑month highs. On top of that, the U.S. economy’s resilience has had traders leaning toward a slower Federal Reserve rate cut cycle, giving the greenback even more steam.
Could Trump’s Return Stir the Pot?
Some voices whisper that a Trump re‑election could usher in tough trade policy, potentially reigniting inflation worries – a scenario that might coax the Fed to keep rates higher for a while.
Keep an Eye on UK Retail Sales
Next up? Retail sales data. If the forecast of a 0.3% drop arrives, sentiment toward the pound could take a bite, pushing expectations for another rate cut and keeping sterling under the microscope.
