UK revealed that September annual CPI by 10.1% YoY, a new multi-decade high, surpassing both the previous 9.9% and the 10% anticipated. Excluding food and energy prices, the reading climbed by 6.5% for the year to September, exceeding the previous 6.3%.
Market participants were reminded of the high likelihood of an impending global recession by recent inflation statistics. Most central banks are committed to bringing down the inflation despite the detrimental effects on economic growth. The continuation of strong quantitative tightening is likely given the ongoing price pressures.
GBP/USD is currently trading in the support area of 1.1200 followed by 1.1150. Should the latter be broken, this will allow prices to fall towards 1.1100.
Alternatively, 1.1280 acts as the resistance. 1.1350 will limit the Cable’s near-term upside.