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.

GBP/USD: UK government hits inflation target, but it’s not all down to policy

UK prime minister Rishi Sunak says the government has done what it said it would in bringing down UK inflation, but economists say the main drop has been fuel costs.

Video poster image

Much of this has already been priced in, as is evidenced by the relatively small move in GBP/USD. The retracement of the move in sterling from yesterday’s sharp move for the dollar, shows that traders were expecting this risk today.

(AI Video Transcript)

UK CPI data

The UK recently had some not-so-great numbers when it comes to prices. Consumer prices, producer prices, and retail prices all showed a decline in October. Inflation dropped to 4.6% year-on-year, which was lower than what was expected (people thought it would be 4.8%). Producer prices fell even further than anticipated, at -0.6%. And retail prices came in at 6.1% instead of the expected 6.4%.

What does all of this mean? Well, it means that the government's goal to bring down inflation by the end of the year has actually been achieved sooner than expected. But here's the thing - the drop in energy prices is a big reason why inflation has gone down. So the politicians can't take all the credit.

US dollar

These numbers also had an impact on the pound (which is the UK's currency). The GBP actually got stronger against the USD yesterday because inflation in the US wasn't so great either. But today, the pound is down at 124.65, which is close to the 200-day average. This drop is because the inflation figures in the UK were weaker than people thought they would be.

UK inflation

So basically, the UK has seen a decrease in prices, especially when it comes to energy. This decrease has helped bring down inflation, but it hasn't been all thanks to the government. And the currency has been affected too, with the pound getting stronger for a bit, but then dropping again. And that's the summary of the video for someone who doesn't know much about trading.


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.