Pound: down again. Overview for 14.09.2022

The British pound against the US dollar dropped to the week’s lows. The current quote is 1.1499.

Yesterday the pound looked rather optimistic, but on Wednesday with the USD advancing all positive factors for the GBP faded away. After the inflation statistics in the US came out, expectations from the September meeting of the Fed became tougher, so that now the interest rate is forecast to be increased by 75 base points. Investors got disappointed by such fast growth of crediting prices, and the market went against risks to the USD.

Great Britain has been active on the macroeconomic calendar for three days in a row.

In the morning, a CPI for August was presented, reflecting a decline of inflation to 9.9% y/y from 10.1% earlier. The report exceeded expectations: the forecast was 10.0%.

Base inflation last month grew to 6.3% y/y from 6.2% previously, though no changes had been expected. The retail prices index remained at 12.3% y/y like before.

The input PPI in August dropped by 1.2% m/m against the expected growth by 0.2% m/m. The output variant of the indicator dropped by 0.1% m/m against the expected growth by 1.0% m/m.

So, it can be concluded that the situation with prices is getting better. However, this is not the result of systematic work, most probably. It is likely that the factor of expensive energy carriers has somewhat faded away, but the negative influence of high foods inflation remains on scene. This means that the monetary policy still needs to get tougher. For the pound, this is arguable news.