GBP/USD traders sit tight ahead of UK CPI

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GBP/USD traders sit tight ahead of UK CPI
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GBP/USD traders sit tight ahead of UK CPI – by fx_ross GBPUSD Currencies BOE CPI

The markets are pricing in a 25bp hike from the BoE at May 11 meeting.

GBP/USD was last trading at 1.2425, flat on the day, and had traveled from a low of 1.2366 to a high of 1.2449 overnight as the markets digest UK data and look to the next set of ammunition in today´s inflation report. in the three months to February. This had been expected to remain steady at 3.7% and instead rose a tick to 3.8%. However, average hourly earnings came in at 5.9% YoY vs. the 5.1% expected and a revised 5.9% previously.

Analysts at Brown Brothers Harriman explained that the WIRP suggests around 90% odds of a 25 bp hike, with another 25 bp hike priced in for August 3. ´´The odds of one last hike in September or November top out near 20%. As a result, the peak policy rate is seen near 4.75% vs. between 4.50-4.75% at the start of last week.´´The headline Consumer Price Index is expected at 9.8% YoY vs. 10.4% in February, while the core is expected at 6.0% YoY vs.

Analysts at TD Securities explained that ´´inflation is proving stickier than the MPC expected in its February projections.´´ The analysts note that ´´both core goods and services prices are proving persistent. March's inflation data is likely to be boosted by rail fares and food.

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