COMMENT-Sterling eyes 2024 low as longs temper ahead of UK CPI

GBP/USD came under increasing pressure on Tuesday, down 0.6% at 1.2648 by NorAm trading, near the lower end of its 1.2788-1.2612 2024 range, as Treasury yields rose on adjustments to investors' Fed rate-cut expectations, while Wednesday's UK CPI data remained the next big event risk.

Market expectations that the BoE will keep a slightly higher rate path in 2024 than the Fed (0#SRA:) (0#SON3:) should keep GBP/USD anchored near highs. However, a significant CPI surprise lower that pulled BoE cuts forward could put the 2024 low in jeopardy putting 200-DMA support at 1.2548 in focus.

The Reuters consensus forecast for UK CPI is for lower core and headline annual inflation rates, though still well-above the BoE's 2% target.

Though UK inflation has been falling faster than BoE expectations, Wednesday's expected inflation dip would probably not result in an early rate cut from the BoE.

Current indications on LSEG's IRPR page indicates the futures market foresees the BoE beginning cuts at the May meeting with near 50bp of easing priced in by the July 2024 meeting.

The recent move away from the Jan. 11 high at 1.2788, has likely been exacerbated by weak UK growth expectations and longer BoE delay, relative to the Fed, in providing accommodation.

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