– Headline U.K. Consumer Price Index (CPI) to Pick Up for Fourth Consecutive Month.
– Core Rate of Inflation to Hold Steady at Annualized 1.2% for Second Straight Month.
Trading the News: U.K. Consumer Price Index (CPI)
Another uptick in the U.K. Consumer Price Index (CPI) accompanied by stickiness in the core-rate of inflation may generate a near-term 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:
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Why Is This Event Important:
The BoE looks poised to retain its current policy ahead of the U.K. Referendum in June as the Monetary Policy Committee (MPC) remains unanimous in keeping the benchmark interest rate at the record-low, but signs of stronger price growth may encourage Governor Mark Carney to adopt a more hawkish tone over the coming months as the central bank sees a risk of overshooting the 2% inflation-target over the policy horizon.
Expectations: Bullish Argument/Scenario
Release
Expected
Actual
Jobless Claims Change (FEB)
-9.1K
-18.0K
Average Weekly Earnings ex. Bonus (3MoY) (JAN)
2.1%
2.2%
Retail Sales ex. Auto Fuel (MoM) (JAN)
0.7%
2.3%
Stronger wage growth along with the pickup in household spending may encourage U.K. firms to boost consumer prices, and a stronger-than-expected CPI report may spur a bullish reaction in the British Pound as it boosts interest-rate expectations.
Risk: Bearish Argument/Scenario
Release
Expected
Actual
Lloyds Business Barometer (FEB)
—
28
GfK Consumer Confidence (FEB)
3
0
BRC Shop Price Index (YoY) (FEB)
—
-2.0%
