PPI Surge Triggers 70% Chance of Fed Rate Hike, GBP/USD Takes a Hit

The US Producer Price Index (PPI) rose to 5.4% annually in August, exceeding forecasts of 5.3%. The core figures were mostly in line with estimates, but the monthly figure was lower than expected.

This has sparked a nearly 70% chance that the Federal Reserve will raise interest rates at the September meeting, according to the CME FedWatch Tool. Energy prices have also continued to trend higher, with Brent and West Texas Intermediate prices surpassing $100 per barrel once again due to the ongoing Middle East conflict.

In the UK, investors are waiting for GDP data on Friday, which is expected to stall at 0%, down from 0.3% MoM in June. Besides this, traders are waiting for British inflation and wage growth data next week.