 Sterling came under renewed pressure at the start of European session, triggered by a deeper-than-expected contraction in UK GDP for April. Services sector, the economy’s dominant component, posted its first monthly decline since October. Nine out of 14 services subsectors registered falls, pointing to broad-based weakness. It's a disappointing start to Q2 and follows weaker-than-expected labor data earlier in the week. The string of soft UK economic releases is likely to reinforce BoE’s case for policy easing. Market expectations for a rate cut in August are now firming, with investors betting that the BoE will continue its gradual loosening cycle. While the central bank has maintained a cautious stance thus far, the data flow increasingly supports action sooner rather than later, especially if core inflation continues to moderate alongside cooling wages and tepid output growth.... |
