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CPI Impact Short-Lived, Despite New Lows For Rate Cut Pricing

GBP
  • EUR/GBP trades off the post-CPI lows, trimming the day's losses to ~8 pips to negate any broader follow through from today's inflation print - despite a renewed dip in BoE rate cut expectations across '24, which now price just ~40bps of cuts across the course of the year.
  • GBP/USD reversal off highs keeps the bearish theme intact, keeping focus on the clear short-term downtrend. Scope is seen for an extension towards 1.2364, a Fibonacci retracement, on any renewed weakness through appearances from BoE's Greene, Bailey and Haskel later today.
  • Salient options rolling off at the cut today include £1.1bln rolling off at 1.2390-00 and £586mln at 1.2450, while 0.8525-35 sees €585mln notional expiring in EUR/GBP.

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