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The U.K. CPI report showed that inflation had unexpectedly rose to 3.2% from 3.0% which sen the pound soaring as expectations that the BoE would pull back on their quantitative easing efforts because of it. Governor king spoke shortly after the speech and although he confirmed that inflation would dictate when the central bank would exit the program to but back debt, he firmly expects inflation to undershoot the bank's 2% target. The remarks would lead to a reversal in price action as the GBP/USD would erase the post release gains. Tomorrow we will see German IFO and US Durable Goods cross the wires and both are expected to show slight improvements from the month prior, but still point toward further contraction.
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John Rivera is the author of Market Brief, Top FX Headlines, and Forex Trading Weekly Forecast on DailyFX.com.
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