Ella 
Sterling (GBP) attracted heavy selling after a weak UK consumer price index (CPI) report for August and investors expecting continued price increases due to a pickup in energy prices. The GBP/USD pair’s weakness came as core inflation fell sharply, pointing to slower demand for non-durable goods. The UK’s producer price index (PPI) for core output contracted in August, suggesting producers have lost confidence in the demand outlook as high inflation affects real incomes of households.
The pound will remain volatile as the Bank of England (BOE) makes an interest rate decision following the release of inflation data. Bank of England policymakers are likely to bring forward a peak interest rate announcement after a weak inflation report, but will still raise interest rates for a 15th consecutive time on Thursday. A 25 basis point hike would push rates to 5.50%, leveling policy differences with the Federal Reserve (Fed).
