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Apr 20 - 05:55 AM

GBP/USD - Will UK CPI Roil BoE Expectations And Sterling?

By Robert Howard  —  Apr 20 - 04:03 AM

April 20 (Reuters) - Bank of England interest rate expectations, and the pound, could be impacted by UK inflation data for March, due on Wednesday at 0600 GMT. CPI is forecast to rise to 3.3% year-on-year, according to the median estimate of economists polled by Reuters, from 3.0% in January and February - before the Iran war began.

A hotter-than-expected CPI print would be a boost for hawks advocating a BoE rate rise this quarter, and might lift GBP - albeit perhaps only temporarily.

Meanwhile, a cooler-than-expected number could reduce the probability of the BoE raising rates to 4% by June or July, to the possible detriment of sterling. On Friday, hawkish BoE Chief Economist Huw Pill criticised his colleagues' "wait and see" messaging on keeping interest rates on hold while the Iran war plays out, and said tackling inflation should be the central bank's main focus - the BoE's CPI target level is 2%.

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(Robert Howard is a Reuters market analyst. The views expressed are his own; Editing by Kevin Liffey)

Source:
London Stock Exchange Group | Thomson Reuters

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