Wednesday's UK inflation figures were slightly higher than expected, Commerzbank FX analysts Ulrich Leuchtmann and Michael Pfister note.
BoE to make its first rate cut soon enough
“Wednesday's UK inflation figures were slightly higher than expected. The headline rate came in at 2.0% y/y (1.9% expected), while the core rate was 3.5% (3.4% expected). However, the figures were very close, with the headline rate coming in at 1.97% and the economists' average at 1.94%.”
“A real surprise looks different. I suspect that the news was not so much that rates were slightly higher than expected. Rather, it was that this went against the global trend. While inflation figures in the US, Canada, Sweden, etc. have recently surprised to the downside, inflation in the UK has been (somewhat) more stubborn.”
“The next decision by the Bank of England (BoE) should be very exciting. We still tend to think that the BoE will then make its first rate cut soon. But whether it is in August or September, the key point will be that with core and services inflation continuing to be high, large rate cuts are unlikely to be an issue. The Pound Sterling should therefore remain well supported over the medium term.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD hangs near weekly low, below mid-1.2900s ahead of UK Retail Sales
GBP/USD remains depressed for the second straight day amid a further USD recovery. The risk-off impulse benefits the safe-haven buck, though Fed rate cut bets cap gains. Diminishing odds for a BoE rate cut in August to lend support ahead of UK Retail Sales.
EUR/USD holds losses near 1.0900 due to increased risk aversion
EUR/USD extends its losses for the second consecutive day, trading around 1.0890 during the Asian session on Friday. The decline in the pair can be attributed to the strengthening of the US Dollar amid increased risk aversion.
Gold buyers stay hopeful whilst above $2,400
Gold price is on a three-day corrective decline from record highs of $2,484 on Friday, paring back weekly gains amid a solid rebound staged by the US Dollar alongside the US Treasury bond yields.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Bitcoin faces resistance around the $65,000 mark
Bitcoin and Ethereum prices encountered rejections upon reaching resistance levels near $65,000 and $3,530, respectively. Meanwhile, Ripple price might undergo a pullback towards the 61.8% Fibonacci retracement level at $0.480 before potentially resuming its upward momentum.
Doom and gloom into the end of the week
Investors have become more distressed into the end of the week, and this distressed sentiment has translated to some very clear risk off flow opening renewed demand for the US Dollar and downside pressure on US equities.