The UK inflation figures came in with a surprise today, posting higher than market expectations at least on the longer term figures. The MoM, on the other hand, came in slightly less than expected. This caused a short term spike in GBP pairs. However, these gains have already been trimmed and we are now back at pre-announcement levels.

 

Outcomes

 

The YoY Core CPI advanced to 1.5% up from 1.3%, while estimates pointed to a rise to 1.4%. This is the highest reading in two years. Moreover, the YoY CPI advanced to 1.0% above the estimated 0.9%. However, the MoM CPI increased by 0.1%, slightly less than expected, while the MoM Core CPI matched expectations, rising by 0.2%.

 

Did the BoE Make a Bad Decision?

 

These figures keep raising questions toward the Bank of England's recent decision to increase asset purchases and cut the rates to a new record low. Was it a bad decision? Probably not. The Brexit impact is yet to be seen over the coming months. Therefore, traders seem to be ignoring the positive economic releases. This also happened two weeks ago when the PMI data showed decent improvement.

 

GBP Outlook

 

The British Pound's downtrend remains in place and sellers are still in control. This trend is unlikely to change any time soon, and that is primarily because the BoE hasn't hinted for an upcoming change in its current policy. Therefore, selling rallies remains the favorable strategy. The resistance area stands at 1.2277, which seems to be solid so far.