U.K. headline inflation likely to remained nearly unchanged in October, BoE likely to hike rate in Q2 2019

U.K. headline inflation data for the October month is set to release this week. According to a Wells Fargo research report, the inflation data is likely to have remained almost the same in the month. U.K. consumer price inflation continues to come down as the impact from the pound’s sharp decline after Brexit keeps waning.

The Bank of England, in its most recent meeting, stated that it does not anticipate inflation to fall much further, with price growth instead holding fairly stable near the 2 percent target. With “aggregate supply and demand now broadly in balance” according to the BoE, the uncertainty about Brexit seems to be the only factor holding the central bank from initiating additional rate hikes, noted Wells Fargo.

With inflation coming down, real wages are accelerating in the midst of the recent momentum in nominal wage growth.

“We look for an eventual Brexit resolution to give way to two BoE rate hikes next year in Q2 and Q4”, added Wells Fargo.

At 19:00 GMT the FxWirePro's Hourly Strength Index of British Pound was slightly bearish at -51.3668, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 158.703. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex