– Headline U.K. Consumer Price Index (CPI) to Increase for Second Consecutive Month.
– Core Rate of Inflation to Advance Annualized 1.3% to Mark First Rise in 2016.
Trading the News: U.K. Consumer Price Index (CPI)
Another uptick in the U.K. Consumer Price Index (CPI) accompanied by a pickup in the core rate of inflation may boost the appeal of the sterling and spur a larger rebound in GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.
What’s Expected:
Why Is This Event Important:
Even though the Monetary Policy Committee (MPC) is widely expected to preserve the record-low interest rate ahead of the U.K. Referendum in June, heightening price pressures may prompt Governor Mark Carney to adopt a more hawkish tone over the coming months as the BoE sees a risk of overshooting the 2% inflation-target over the policy horizon.
Expectations: Bullish Argument/Scenario
Release
Expected
Actual
Gross Domestic Product (YoY) (4Q F)
1.9%
2.1%
Lloyds Business Barometer (MAR)
—
43
Average Weekly Earnings ex. Bonus (3MoY) (JAN)
2.1%
2.2%
Improved confidence accompanied by signs of a stronger-than-expected recovery may boost consumer prices, and a marked uptick in the headline as well as the core rate of inflation may spur a bullish reaction in the British Pound as it boosts interest-rate expectations.
Risk: Bearish Argument/Scenario
Release
Expected
Actual
Trade Balance (FEB)
-3.400B
-4.840B
Unit Labor Costs (YoY) (4Q)
1.9%
1.3%
Net Consumer Credit (FEB)
1.3B
1.3B
No Comments