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UK Inflation Data to Impact BoE Policy and Pound Sterling Volatility

UK Inflation Data Release

The UK’s Office for National Statistics is set to release the Consumer Price Index (CPI) data for September on Wednesday. This eagerly anticipated data is expected to reveal a decrease in both headline and core annual inflation, while still remaining above 6%. The outcome of this release has the potential to influence the Bank of England’s (BoE) policy direction and contribute to the volatility of Pound Sterling.

Pound Sterling’s Recent Recovery

The Pound Sterling has been consolidating its recent recovery near 1.22 against the US Dollar. Traders and investors eagerly await the results of the inflation data, as a better-than-expected outcome could revive bets of another BoE rate hike in December, potentially boosting the value of the Pound Sterling.

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Anticipated Inflation Figures

According to predictions, the headline annual UK CPI is anticipated to rise by 6.5% in September, slightly down from August’s 6.7%. On the other hand, core CPI is expected to rise 6.0% year-on-year in September, showing a slight slowdown from August’s 6.2% increase.

Wage Inflation and BoE’s Perspective

Recent wage inflation data for the UK economy showed Average Earnings excluding bonuses rose 7.8% year-on-year in August, aligning with market forecasts and slightly slowing down from a revised 7.9% increase in the previous three months. BoE Chief Economist Huw Pill referred to these wage inflation figures as an outlier amidst high wage inflation trends.

BoE Governor Andrew Bailey acknowledged progress on inflation during the Institute of International Finance Annual Membership Meeting earlier this week. However, he expressed confusion over the continuous strength of pay growth in the UK and emphasized that more work needs to be done in understanding the situation.

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This article provides an overview of the upcoming UK inflation data release, its potential impact on BoE policy and Pound Sterling volatility. Stay tuned for the latest updates on this significant event.

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