The British pound was actually one of the stronger currencies in the forex markets on Tuesday, slipping only against the greenback, as the latest inflation data suggests that the Bank of England may be hesitant to slash rates to zero in the near-term. Though UK CPI fell 0.7 percent in January, the annualized pace remained well above the BOE’s 2 percent target at 3.0 percent, down from 3.1 percent in December. The BOE has indicated that they expect inflation to fall much further this year, but the direction of interest rate expectations for the UK may hinge upon the release of the BOE’s meeting minutes on Wednesday at 4:30 ET. During the February meeting, the BOE’s Monetary Policy Committee (MPC) slashed the Bank Rate by 50 basis points to yet another record low of 1.00 percent, as expected. However, the British pound subsequently rallied as the MPC suggested that they may not cut rates again on March 5. Since then, though, BOE Governor Mervyn King’s comments have signaled otherwise and if the MPC’s comments and outlooks signal that the central bank will reduce the Bank Rate further, the British pound could pull back.
Related Article: British Pound Weekly Trading Forecast
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