UK Inflation Falls; GBP Now Eyes Wages Data and Bank of England
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UK Inflation Falls, Wages Data Next
UK inflation fell more than expected in February – to 2.7% y/y from 3.0% in January and against expectations of 2.8% - as a stronger British Pound and weaker energy prices crimped price rises. Sterling fell against the USD but further moves are expected to be limited with both the Bank of England and the US Fed announcing their latest monetary policy reports over the next two days. Also, UK wages data is released on Wednesday and an improvement in average earnings could see the negative real wage gap consigned to the bin.
GBPUSD Price Chart 10 Minute Time Frame (March 19 – 20, 2018)
Bank of England Policy Announcement
On Thursday the Bank of England is expected to leave all monetary policy settings unchanged but today’s better-than-expected inflation data, and tomorrow’s expected rise in average wages, will give the governor more scope to hint of further rate rises. The market has already priced-in a 0.25% rise in May, and a combination of stronger UK data and the recent agreement of a Brexit transition period could see governor Carney hint towards a second UK rate rise in November.
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--- Written by Nick Cawley, Analyst
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