Today we have GBP CPI y/y data to be released

Today we have GBP CPI y/y data to be released. Current concern is the pace of CPI growth in the UK economy, as expectation for CPI is at 3%, which is above the 1-3% range. In the usual circumstance, as inflation increases (especially beyond the target range), the tendency is for the Central Bank to increase interest rates. However, I do not think that the BoE will be keen to increase rates, with the Brexit in the horizon.

Given eventual USD strength, the GBP is poised for a drop, if it fails to break above the 1.3800 level.

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