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GBP/CAD eases from 10-week high as UK inflation cools more than expected

The GBP/CAD currency pair eased from recent 10-week high on Wednesday, after data showed UK CPI inflation had decelerated more than expected in October.

This added to investor expectations the Bank of England could begin cutting interest rates by May 2024.

Annual consumer inflation in the United Kingdom eased to 4.6% in October from 6.7% in September. In comparison, market consensus had pointed to a smaller drop – to 4.8%.

It has been the lowest inflation rate since October 2021 and also more than two times lower compared to late 2022. The CPI cooling was in part due to the recent reduction in energy prices after Ofgem’s decision to lower the cap on household bills.

In October, both gas and electricity costs dropped at the sharpest rate since January 1989.

Meanwhile, UK food inflation cooled to 10.1% in October, or the lowest since June 2022.

Annual core inflation, which excludes volatile categories such as food and energy, also decelerated in October, to 5.7%, or the lowest level since March 2022.

As of 8:08 GMT on Wednesday GBP/CAD was edging down 0.29% on the day to trade at 1.7061. Yesterday the minor Forex pair went up as high as 1.7132. The latter has been the pair’s strongest level since September 6th (1.7176).

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