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The inflation data is soft - but not as soft as at first glance

UK DATA
  • As noted, the fact that air fares accounted for a decent amount of the downside surprise today can explain a lot of the pullback in GBPUSD.
  • This is still a softer number than expected, but with clothing also pulling headline CPI lower, it's not as soft as it appeared at first glance.
  • However, there was a general broad-based fall outside of food and clothing which means this remains a soft print.
  • Looking through the upside contributors - the only notable one was used cars contributed which +0.07ppt - that's a larger increase than expected and hadn't really been flagged in any previews that we read.
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  • As noted, the fact that air fares accounted for a decent amount of the downside surprise today can explain a lot of the pullback in GBPUSD.
  • This is still a softer number than expected, but with clothing also pulling headline CPI lower, it's not as soft as it appeared at first glance.
  • However, there was a general broad-based fall outside of food and clothing which means this remains a soft print.
  • Looking through the upside contributors - the only notable one was used cars contributed which +0.07ppt - that's a larger increase than expected and hadn't really been flagged in any previews that we read.