GBP faces the risk of a substantial decline. Overview for 19.10.2023

The British pound sterling paired with the US dollar has returned to a downward trend. The GBPUSD current exchange rate is 1.2130.

Global risk aversion is weighing against the British currency.

In the past few days, the UK has released a significant amount of economic data, with a focus on price-related parameters. The growth in average monthly wages, excluding bonuses, dropped to 8.1% in August, falling short of the expected 8.3% and the previous month's figure of 8.5%.

The UK is once more encountering challenges related to prices. In September, inflation remained at 6.7% y/y, despite expectations of a decline to 6.6%. On a monthly basis, the consumer price index increased by 0.5%, as expected. In August, monthly inflation had risen by 0.3%.

Core prices have declined but not as markedly as forecasts suggested. In September, the figure was 6.1% y/y, against expectations of 6.0% and the previous reading of 6.2%. On a month-on-month basis, core prices rose by 0.5%, as expected, after expanding 0.1% m/m in August.

Interestingly, the producer purchase price index declined to -2.6% y/y in September, while the selling price index recovered to -0.1% y/y.

The price situation appears notably unstable and could either improve or deteriorate significantly. This uncertainty presents a risk factor for GBP.