UK headline CPI rose 3.5% year-on-year in September, up from 3.1% in August and above the 3.4% market forecast, leaving inflation well above the Bank of England’s 2% target. Core CPI increased to 2.8% from 2.6%, beating expectations of 2.7%. On a monthly basis, CPI eased to 0.4% from 0.5% but still topped the 0.3% consensus. Despite the hotter print, GBP/USD was 0.08% lower at 1.3373.
Market Positioning and Anticipated Policy Response
Ahead of the release, markets had been positioned for firmer price pressures and a possible policy response at the BoE’s November meeting, with the data published alongside PPI and retail sales.
Energy Markets and Economic Backdrop
Energy was in focus: crude prices were up more than 10% so far in October and nearly 50% since July, while Brent traded above $108.00 at five-month highs. The backdrop included references to a resilient labour market, a positive August GDP surprise, and technical levels on GBP/USD, including resistance around 1.3370–1.3400 and support near 1.3295 and 1.3140.
