The British pound held its own against the majors, for the most part, and only fell against the New Zealand dollar and the ultra-strong Japanese yen. UK fundamentals worked in favor of the currency, as the output producer price index (PPI) rose for a sixth month in August at a rate of 0.2 percent, while the input PPI surged 2.2 percent during the same period, marking the sharpest increase since June 2008. The gains helped to moderate the year-over-year readings, with the annual rate of output PPI up to -0.4 percent from -1.3 percent and input PPI up to -7.5 percent from a nearly 23-year low of -12.2 percent. The data creates some upside risks for next Tuesday’s release of the UK’s consumer price index (CPI) for the month of August, which is expected to rise 0.3 percent. The more important part of this report is that the annual rate of growth, which is more closely watched by the Bank of England, is forecasted to fall to 1.4 percent, the lowest since October 2004, from 1.8 percent, keeping inflation within the central bank’s acceptable range of 1 percent - 3 percent, but below their 2 percent target. If CPI falls more than projected, the British pound could pull back sharply as the markets will anticipate that the BOE will expand their quantitative easing efforts even further before year-end. On the other hand, if CPI holds strong, the currency could rally in response.