The British pound sterling is showing signs of recovery, bouncing back from a five-month low, with GBP/USD stabilising around the 1.2470 mark on Thursday. This rebound is attributed to the release of UK inflation data, suggesting a possible monetary policy easing by the Bank of England (BoE).
The UK's consumer price index (CPI) slowed to 3.2% year-on-year in March, down from 3.4% in February, marking the lowest inflation rate in two and a half years. This slowdown has raised investor optimism regarding potential policy easing by the BoE, particularly since core inflation has also dropped to its lowest since mid-2021. However, persistent inflation in the services sector may lead to cautious deliberation among certain members of the monetary committee.
Meanwhile, representatives from the US Federal Reserve have reiterated that US interest rates are likely to remain high for an extended period. In contrast, the BoE is perceived as relatively stable, potentially initiating monetary policy easing by summer.
The first quarter saw significant pressures from the tight employment market and shocks from rising energy prices, which initially suggested that the BoE might follow the European Central Bank (ECB) and the Fed in lowering interest rates. However, market conditions have shifted considerably. Exchange analysts now anticipate that the ECB might cut interest rates by June, the BoE by September, and the Fed only in Q4.
The UK's consumer price index (CPI) slowed to 3.2% year-on-year in March, down from 3.4% in February, marking the lowest inflation rate in two and a half years. This slowdown has raised investor optimism regarding potential policy easing by the BoE, particularly since core inflation has also dropped to its lowest since mid-2021. However, persistent inflation in the services sector may lead to cautious deliberation among certain members of the monetary committee.
Meanwhile, representatives from the US Federal Reserve have reiterated that US interest rates are likely to remain high for an extended period. In contrast, the BoE is perceived as relatively stable, potentially initiating monetary policy easing by summer.
The first quarter saw significant pressures from the tight employment market and shocks from rising energy prices, which initially suggested that the BoE might follow the European Central Bank (ECB) and the Fed in lowering interest rates. However, market conditions have shifted considerably. Exchange analysts now anticipate that the ECB might cut interest rates by June, the BoE by September, and the Fed only in Q4.