U.K. PPI Input Actual -2.0%, Expected -2.0%, Previous -3.0% (Revised from -3.3%)

U.K. PPI Output ActActual 0.0%, Expected -0.7%, Previous -0.8% (Revised from -0.7%)

Release Explanation: Measures the rate of inflation of manufacturers when purchasing Goods and Services; the rate of Inflation at the factory Gate. Usually, an increase in the price of raw Goods and services gets passed on to the consumer, therefore this is the first stage on Retail Inflation.

Trade Desk Thoughts: The U.K. economy is showing serious signs of disinflation, at least when it comes to producer's input costs. Input prices, or the price at which producers and manufacturers buy materials and fuel, fell in December by 2.0%, as expected. Output price, or the prices at which manufacturers sell, remained flat, despite the forecasted number.

On an annualized basis, input prices are up 4.3%, even though only a few months earlier were higher by more than 30%. The lower reads are mostly a consequence of the declines seen in the crude oil market.

Forex Technical Reaction: The pound rose 20 pips after the news report. Previously, the pair traded flat in the Asian session, near the neutral pivot point (1.5190), but has fallen 100 pips in the European session.