UK inflation news and updates Dec-15, 2021

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Trader
Sep 23, 2021
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London, United Kingdom
The latest UK inflation data will be a stark reminder to the Bank of England that price pressures are getting out of control and that interest rate hikes are needed, and quickly. Headline UK inflation hit a decade high 5.1% in November, beating forecasts of 4.7% and a prior month's reading of 4.2%.

These levels of inflation would normally prompt a response from the BoE, especially when taken alongside another set of robust employment figures released yesterday. However, the central bank may put off hiking rates at tomorrow's policy meeting with the rapid spread of Omicron now seemingly dictating monetary policy. The BoE is now stuck between a rock and a hard place.

GBP/USD has nudged higher post-release but remains in a longer-term downtrend off the June 1.4250 high. Support at 1.3162 has held. Cable traders are now facing two high-impact events over the next day, tonight's FOMC meeting and tomorrow's BoE meeting, both of which could move cable sharply.

On the other hand,
The U.S. dollar held firm on Wednesday, with currency markets quiet as investors waited to see if the U.S. Federal Reserve would reinforce market expectations for rate hikes next year.