Skip to content

We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Drawdown in sterling for both GBP/USD and GBP/EUR as UK CPI reaches 10.1% YoY

A rise in food prices has been mostly responsible for the climb in consumer price inflation. Food and non-alcoholic price rises are at 14.6%, levels not seen in 40 years. Both GBP/USD and GBP/EUR have seen a drawdown in sterling.

Video poster image

(Video Transcript)

Inflation at four decade highs

Inflation has risen to its fastest rate in 40 years, with a rise from 9.9 to 10.1% of the consumer price headline rate.

Let's take a look at the figures as we continue to monitor the fallout from the data that we've seen. It's not just consumer prices but also producer prices and retail prices that have risen.

But, it's the headline 10.1% reading in September that takes us back to where we were in July after that slightly lower print in August, but we have been expecting a 10% number. So this is stronger than had been expected, adding to extra expectation that we could well see the Bank of England (BoE) give us a bumper interest rate rise on the 3rd of November.

Food and the non-alcoholic drink have risen by 14.6% in the 12 months through to September, up from 13.1% in the month of August. And it means that prices as I said are rising at this 40-year rate now. The inflation numbers are being driven by food prices mainly.

GBP/USD

If we look at what's been happening on the foreign exchange markets, in fact there's been a second day of declines for sterling.

This is the the daily candle chart showing us a pullback on from yesterday's drawdown. We saw just a slight reversal of what we saw was overall a positive day on the markets for sterling on Monday.

We've seen Jeremy Hunt now come through as the new Chancellor Exchequer, giving some extra hope for sterling off the lows that we saw when we saw that low print back at the lowest point we ever seen since decimalisation back in the early 70's. That was on the 26th of September. Since then, sterling has strengthened.

GBP/EUR

It also strengthened as well against the euro. But in today's session, its down for a fourth day in a row.

But we see it well off the lows that we've seen over the last couple of weeks or so for sterling. But the news out of this today is that we should expect to see further interest rate rises when the Bank of England meets at the beginning of November.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.