The UK consumer price index for September fell from 2.2% to 1.7% , while expectations were at 1.9%.
The British pound fell against most currencies after these weaker-than-estimated figures, confirming stronger prospects for the Bank of England to cut interest rates next November.
The GBP/USD pair also fell from 1.3070 to trading below 1.3000 levels, as key annual inflation returns below the 2% level for the first time since April 2021.
Looking at the details, Service inflation showed a noticeable decrease from 5.9% to 5.6%. In basic terms, the sharpest decline was from 5.6% to 4.9%, and this is certainly a welcome development from the Bank of England.
The annual core consumer price index excluding food and energy also fell from 3.6% to 3.2%.
Traders were estimating a probability of about 80% to cut interest rates by 25 basis points for the next month when the data appeared, and it is expected that we will see a rise in this percentage later, with the probability of a reduction of 50 basis points if the data remains negative until next month's meeting.
