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May 20 - 09:55 AM

Goldman Sachs: GBP After UK Labor Data and Into this Week's CPI Print

By eFXdata  —  May 20 - 08:33 AM


Goldman Sachs assesses the potential influence of the upcoming UK Consumer Price Index (CPI) on the British pound (GBP) ahead of this week's release. They anticipate that the CPI's outcome will help shape Bank of England (BoE) policy expectations but may not significantly sway GBP due to broader market dynamics.

Key Points:

  • Mixed Employment Data: Last week’s UK employment figures were mixed, leaving BoE rate cut expectations largely unchanged.
  • CPI Expectations: This week's CPI report is critical, expected to include effects from annual price adjustments in several categories, often referred to as the 'April Effect.'
  • BoE Projections: Goldman Sachs' economists believe the BoE has adequately factored these potential volatilities into their projections, suggesting readiness for a rate cut as early as June if CPI aligns with their forecasts.
  • GBP Response to CPI: While the CPI data is pivotal for policy, its direct impact on GBP may be moderated by the currency's greater sensitivity to global economic shifts rather than domestic fiscal policy changes.
  • Global Influence: GBP performance is closely tied to global financial conditions, with tendencies to strengthen against USD and EUR amidst easing financial conditions marked by falling yields and rising stock markets.


Although the upcoming UK CPI report is key for setting domestic monetary policy, its direct influence on GBP might be subdued as the currency reacts more strongly to global financial trends and policy divergences. This dynamic suggests that broader market conditions could play a more critical role in shaping GBP movements around the CPI release.

Goldman Sachs Research/Market Commentary


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