Sterling Lags After CPI Miss, But BoE Rate Cut to Stay Gradual
| Action Insight Mid-Day Report 3-26-25 |
Sterling Lags After CPI Miss, But BoE Rate Cut to Stay Gradual |
Sterling fell broadly today after UK’s February CPI came in slightly below expectations. However, the selloff has been contained, with markets still expecting the BoE to proceed cautiously with policy easing. In particular, services inflation remained sticky at 5%, signaling that underlying price pressures are not abating as quickly as hoped. Some economists argue that February’s inflation dip may prove to be a false dawn. The scheduled rise in energy bills and national insurance contributions next month could push inflation back towards 4% level again, undermining hopes of sustained disinflation. Against that backdrop, BoE is unlikely to accelerate the pace of rate cuts. Markets still see a 25bps rate reduction as a realistic outcome for BoE’s next meeting in May. That would align with the central bank's previously communicated strategy of a cautious and gradual easing path, one cut per quarter. On the day, Sterling is the weakest performer among major currencies, followed by Yen and Swiss Franc. Commodity currencies continue to lead with Kiwi topping the chart. Dollar and Euro are positioning in the middle of the pack.... |
GBP/USD Mid-Day Outlook Daily Pivots: (S1) 1.2909; (P) 1.2938; (R1) 1.2974; More... Intraday bias in GBP/USD remains neutral for the moment. Corrective fall from 1.3013 short term top could still continues. Below 1.2886 will target near term channel support (now at 1.2782) and possibly below. But downside should be contained by 38.2% retracement of 1.2248 to 1.3013 at 1.2721 to bring rebound. On the upside, break of 1.3013 will resume the rally from 1.2099. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 23:50 | JPY | Corporate Service Price Index Y/Y Feb | 3.00% | 3.10% | 3.10% | 3.20% | | 00:30 | AUD | Monthly CPI Y/Y Feb | 2.40% | 2.50% | 2.50% | | 07:00 | GBP | CPI M/M Feb | 0.40% | 0.50% | -0.10% | | 07:00 | GBP | CPI Y/Y Feb | 2.80% | 2.90% | 3% | | 07:00 | GBP | Core CPI Y/Y Feb | 3.50% | 3.60% | 3.70% | | 07:00 | GBP | RPI M/M Feb | 0.60% | 0.80% | -0.10% | | 07:00 | GBP | RPI Y/Y Feb | 3.40% | 3.60% | 3.60% | | 09:00 | CHF | UBS Economic Expectations Mar | -10.7 | 3.4 | | 12:30 | USD | Durable Goods Orders Feb | 0.90% | -0.70% | 3.20% | | 12:30 | USD | Durable Goods Orders ex Transportation Feb | 0.70% | 0.40% | 0% | | 14:30 | USD | Crude Oil Inventories | 1.5M | 1.7M | | 17:30 | CAD | BoC Summary of Deliberations |
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