The euro’s official reference value against sterling edged lower on Oct. 21, while September inflation in the United Kingdom increased attention on the Bank of England’s (BoE) next interest-rate decision.
The European Central Bank (ECB) set its reference rate at 0.83825 pound per euro on Oct. 21, down from 0.84028 on Oct. 20, a decline of about 0.24%. The published figure is a once-daily reference value; it does not show the pair’s movement from hour to hour.
The Office for National Statistics (ONS) said annual consumer price inflation rose to 3.5% in September from 3.1% in August. Transport costs, with motor fuels playing the biggest role, accounted for more of the change in the annual CPI rate between August and September than any other category, the ONS said. Motor fuel prices were 29.8% higher than a year earlier, compared with a 23.0% annual increase in August. Core CPI, which excludes energy, food, alcohol and tobacco, rose to 2.8% from 2.6%; services inflation increased to 3.7% from 3.4%. EconoTimes previously covered the release in a report on September inflation and the Nov. 5 rate decision.
FXStreet reported that EUR/GBP traded near 0.8390 during early European trading and said a BoE rate increase at the next meeting was widely expected. The outlet also reported that sterling attracted buyers after the inflation release. Those early-session observations are from a different time and measure than the ECB’s daily reference rate.
Inflation is above the BoE’s 2% target. At its Sept. 17 meeting, the Monetary Policy Committee held Bank Rate at 3.75%. Six members voted to hold, while committee members Megan Greene, Catherine L Mann and Huw Pill preferred a quarter-point increase to 4%.
The Bank’s September minutes said energy prices had risen since its July Monetary Policy Report. Using energy prices as of Sept. 14, it forecast inflation at around 3.75% in the fourth quarter of 2026 and slightly above 4% in the first quarter of 2027. Those were projections, not reported outcomes.
In a speech published Oct. 20, Greene warned the Bank could be late to respond if it waited for price pressures to spread. “If we wait for this evidence to lean against second-round effects with a tighter monetary policy stance, we will already be too late,” she said.
The BoE’s next rate decision is scheduled for Nov. 5. The ONS is due to publish its next U.K. inflation data on Nov. 18.
