British Pound: Upside momentum targets 1.3405 against US Dollar – UOB

At the onset of the UK's data-laden week, the British Pound exhibited mixed performance. Compared to the Japanese Yen, GBP was nearly unchanged at approximately 210.74. In comparison to major currencies, GBP showed resilience against the Euro, standing out among the others. As the financial markets prepare to scrutinize the upcoming UK employment data for the three months ending August and the Consumer Price Index (CPI) for September, analysts are closely monitoring these indicators.

The Office for National Statistics (ONS) anticipates a slight rise in the UK's unemployment rate to 5.0% from 4.9% in the three months ending July. Although average earnings including bonuses modestly grew by 3.8% year-on-year, economists predict that UK inflation will surge, reaching its peak this year in September, with headline CPI forecasted to climb to 3.49% year-on-year and core CPI to 2.74% year-on-year.

Looking ahead, Deutsche Bank warns that price pressures may escalate further, citing rising energy costs and lower harvests impacting food costs. Consequently, they project CPI to increase further, reaching 3.7% by 2026, while the Retail Price Index (RPI) is expected to soar to 5.2% year-on-year. These inflationary concerns are expected to influence Bank of England's interest rate decisions during their November meeting, alongside retail sales and preliminary S&P Global PMI data scheduled for release on Friday.