If you missed this webinar and would like to know about future events, you can see the full DailyFX webinar schedule here.
Easing Inflation Reduces Rate Hike Bets
UK Inflation has continued to ease, having peaked at 3.1% at the back end of last year. CPI hovers at 1-year lows of 2.4% (falling from 2.5%), as the GBP depreciation effects on inflation following the Brexit referendum dissipates. As such, this reduces the necessity for the Bank of England to raise interest rates with inflation seemingly returning towards the central banks 2% target, which has been reflected in market pricing. OIS markets (Overnight Index Swaps) are now pricing in a 33% chance of an August rate hike, down from 40%, while a November rate hike is seen at 72%. In the wake of the inflation report, GBP fell to fresh 2018 lows against the US Dollar with the pair now firmly below the 1.3400 figure and looking to make a test for the 1.3300 handle.
Source: Thomson Reuters
As a reminder, last week saw the most recent BoE Quarterly Inflation Report in which the central bank lowered their CPI forecast across the 3-year horizon, while also noting that GBP depreciation effects on inflation may unwind further than previously thought.
GBP/USD CHART: DAILY TIME FRAME (May 2017-May 2018)
DailyFX has a vast amount of updated resources to help traders make more informed decisions. These include a fully updated Economic Calendar, Educational and Trading Guides and the constantly updated IG Client Sentiment Indicator.
--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.mcqueen@ig.com
Follow Justin on Twitter @JMcQueenFX
