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Modi, AMLO Top Major Economy Leader Poll, Macron Last


Under Pressure


Trend Condition Remains Bearish

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  • UK inflation data for September is due for release at 7:00BST.
  • Consensus expects headline CPI at 3.2% Y/Y (unchanged from the August print). Most forecasts largely range from 3.0-3.4% with more analysts looking for a softer print.
  • Core CPI is expected to fall back one tenth Y/Y by consensus from 3.1%Y/Y to 3.0%. In the Bloomberg survey there is a slight bias to a softer print than this but most analysts who look for a softer print expect just a one tenth miss while those looking for a higher than 3.1% print are more dispersed.
  • RPI is forecast at 4.7%Y/Y by half the economists in Bloomberg's survey (down from 4.8%Y/Y in August) but the split of other analysts is more symmetric than for CPI.
  • Note that both the August print was boosted by base effects from the Eat Out to Help Out scheme which was in effect last summer which will drop out this month.
  • The Y/Y services component is therefore expected to fall, but goods price inflation is expected to make up for this shortfall. The October print is when the increase in energy prices is likely to become more apparent, with the increase in the Ofgem price cap increase coming into effect.
  • In terms of market impact, a higher print here is likely to see market expectations of hikes this year hold up (but unless we see a large upside surprise shouldn't really see much more priced in given what we already have priced). There seems more scope for a bigger market move on a disappointment. Out technical analyst sees firm resistance in EURGBP at 0.8518 and it would take a large surprise in our view to break through this level.