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: Factory prices increased for a second consecutive month, after plunging lower for six months. The input prices, or the price at which producers and manufacturers buy materials and fuel, rose in February by 0.6%, much more than expected. The output price, or the prices at which manufacturers sell, gained 0.1% for a second consecutive month. Input prices are up 0.5% from one year ago, but down from 1.5% in January, while output prices reached 3.1% in February from one year earlier.
The upward pressure on the monthly data came from a rise in the price of crude oil, helped by the strong declines in the pound’s value. To some extent, the PPI read does not justify the BoE view that sees a real danger of “undershooting” the inflation target
Forex Technical Reaction: The pound saw strong moves during the overnight session. The pair rose 160 pips in the Asian session, but gave back some of the ground during the European trading hours. Currently, the pair trades near TheLFB R1 (1.4225).