BoE, CPI week: sterling in focus
The British pound continues to firm against other currencies. Follow IGTV’s Angeline Ong to find out how to trade sterling ahead of an expected rate hike from the Bank of England and the latest inflation reading.
(Video Transcript)
GBP
Two currencies and the GBP will be the centre of attention this week for a number of reasons. One, its continued strength against other currencies. On Wednesday, consumer inflation in the UK is expected to slow to a new 14-month low. The market forecast headline CPI at eight and a half percent in May year-on-year, down from 8.7% in April. The core inflation rate is anticipated to remain at 6.8%, a record high reached last month.
The Bank of England
Then the Bank of England meets on Wednesday. A 25 basis point hike seems to be baked in Bloomberg, suggesting that the Bank of England will do a dovish hike to emphasise their drive to keep inflation down but, at the same time, keep consumers on side. The Bank of England has been walking this tightrope to try and keep consumption going while at the same time warning consumers that they still have a keen eye on those very hot inflation numbers. It's also seen in this Bloomberg report that if the Bank of England does go down a quarter point, it will then potentially pause.
GBP/USD
Last week, we saw GBP/USD, this cross has been quite interesting for us because it has been very volatile of late. The GBP/USD posted its strongest weekly gain so far this year. This is from the previous week and now trades at a 14-month high. I also want to show you the pound versus the yen, which is showing quite a similar trend. There. Trading. This crossed at its highest level since December 2015 and against the euro. Let's take a look at the euro. ten-month high against the EUR.
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