- UK inflation slightly beat expectations with 1.9% YoY.
- The BOE has yet another reason to raise rates.
- Brexit is in the way of everything, so a decision will have to wait.
The deceleration in inflation may have ended, or at least paused. The UK reported a slight acceleration from 1.8% to 1.9% in February after months of declines. Energy prices were responsible for the moderation and have contributed to the bump.
The data join the upbeat jobs report released on Tuesday, that showed a healthy growth rate of 3.4% in wages and a drop in the unemployment rate to 3.9%.
Both publications add to the case for a rate hike in the UK. A rise in interest rates will, in turn, push the pound higher. However, the reaction on GBP/USD was muted. The Bank of England convenes on Thursday, and they will likely sit on their hands once again.
Why? The answer should be evident to anyone following the news: Brexit. The uncertainty around Britain's exit from the European Union paralyzes political life and economic policymaking in Britain.
The latest from the Brexit front is that the UK will likely ask for a short Brexit extension, postponing the precipice by only several months. However, as long as Brexit is orderly, things will return to normal. Assuming a no-deal Brexit is avoided, the recent data suggest the BOE may raise rates as early as August.
The next Quarterly Inflation Report is due in May, and that will be too early for a hike. However, by August's QIR, more clarity is likely. If there is no severe disappointment in the data, the BOE is on track to hike, and GBP/USD will have more reasons to rise.
More: GBP/USD Forecast: Traders go short as May goes for a short Brexit extension
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD retreats to 1.0750, looks to post small weekly gains
EUR/USD lost its traction and declined to the 1.0750 area in the American session on Friday. In the absence of high-tier data releases, week-end flows seem to be impacting the pair's action heading into the weekend.
GBP/USD holds above 1.2550 ahead of the weekend
GBP/USD keeps its footing on Friday and trades modestly higher on the day above 1.2550 following Thursday's rally. Ahead of next week's all-important US inflation data and Fed policy announcements, modest US Dollar weakness allows the pair to stay in positive territory.
Gold struggles to find direction, holds steady near $1,960
Gold price struggles to make a decisive move in either direction on Friday in the absence of high-impact data releases. The benchmark 10-year US Treasury bond yield stays relatively calm above 3.7% following Thursday's slide, limiting XAU/USD's action.
Weekly Roundup: Binance US halts fiat services, Coinbase does business as usual, XRP hits key milestone
The US financial regulator, the Securities and Exchange Commission’s (SEC) clampdown on exchange negatively influenced the crypto market and assets throughout the week. The lawsuits against Binance and Coinbase resulted in several challenges for the platforms’ users.
The Week Ahead - FOMC, ECB and Bank of Japan, US CPI, China retail sales and Tesco results
A busy week is ahead, including meetings from the Federal Reserve, the European Central Bank, and the Bank of Japan. Data to be released includes US CPI and China retail sales. Tesco will also release results.