Pound Steadies as UK Inflation Cools as Expected

The British pound remained fairly stable around $1.31, which is near the seven-month low it hit earlier in the month, following new data indicating a significant reduction in UK inflation. This slowdown brought some relief to both the Bank of England and the UK government, while providing Finance Minister Rachel Reeves with increased momentum as she gears up to present a crucial budget next week. In October, headline inflation decreased to 3.6%, driven by reduced household electricity and heating costs due to changes in the Ofgem energy price cap, coupled with lower hotel prices. Inflation in the services sector declined more than anticipated, falling to 4.5%, while core inflation eased to 3.4%. Reeves has committed to lowering living expenses in her tax and spending statement scheduled for November 26, with the aim of further reducing inflation and potentially paving the way for the Bank of England to consider interest-rate cuts. Concurrently, the US dollar remains buoyant as investors anticipate the pivotal September jobs report on Thursday, keeping the broader currency markets in a state of caution.

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