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GBP on Top as CPI Revives Confidence in Rate Hikes

FOREX
  • UK inflation data kickstarted the European session with a solid beat on expectations: headline Y/Y CPI rose to 10.4%, well ahead of the 9.9% analyst consensus, while the core measure similarly topped forecast (6.2% vs. Exp. 5.7%). Services inflation remained a key driver, with restaurants and hotels prices accounting for the largest upward effect on the headline.
  • The release saw markets further bake in expectations of a 25bps hike at Thursday's BoE meeting - a prospect that was on much shakier footing this time last week. Suitably, GBP rallied, putting GBP ahead of all others in G10 to put GBP/USD briefly ahead of resistance to print 1.2286.
  • The greenback is edging lower, slipping against most others despite a shakier equity backdrop that indicates a lower open on Wall Street later today. The USD Index trades within range of this week's lows and the lowest level since mid-February. Markets keep a close eye on key resistance at the 1.08 handle for EUR/USD - a break above which could help the next leg lower for the dollar.
  • Focus Wednesday remains on the FOMC rate decision, at which markets look for a 25bps rate rise from the Fed, as the markets hone in on any clues for the sensitivity of the Fed's tightening cycle to the ongoing banking woes across the US.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
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MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Energy BulletsCommodities

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