- GBP/USD comes under pressure ahead of this week’s key data.
- Bank of England Governor Andrew Bailey said inflation looks set to fall markedly this year as energy prices fall.
The pair GBP/USD fell 0.27% to 1.2194 after hitting its highest since mid-December at 1.2288 from a low of 1.2170, while traders await UK employment and inflation data due later this week for clues on the monetary policy plans of the Bank of England (BoE).
In the latest trading, Bank of England Governor Andrew Bailey said on Monday that inflation looks set to fall sharply this year as energy prices fall.
However, he stated that the shortage of workers in the labor market represents a “significant risk” for this scenario.
“I think going forward, the main risk to lower inflation…is the supply side, and in this country in particular, the issue of labor reduction,” Bailey said. to legislators from Parliament’s Treasury Committee.
UK main data
Meanwhile, the Employment data will be published on Tuesday and the Inflation figures on Wednesday. ”We expect another big decline in the overall UK Consumer Price Index, largely due to a nearly 5% month-on-month drop in petrol prices, but also because retailers discounted heavily in the month for rid of high inventory levels,” analysts at TD Securities said. Although our forecast is well below the Bank of England’s (10.9% yoy), much of this gap is due to lower gasoline prices and not weaker underlying dynamics.”
As for the employment data, analysts say that “we expect an unchanged unemployment rate in the three months to November, as the labor market remains persistently tight.” At the same time, we believe that both headline and ex-bonus salary growth accelerated again, despite high-frequency data softening further.”
A tenth consecutive rise is expected ahead of next month’s meeting, with money markets pricing the probability of a 50 basis point (bp) rise at 65% and a 25bp rise at 35%.
Rabobank analysts note that “although the Bank of England has good reason to adjust its tone, there were several instances last year where this failed to boost sterling, given the backdrop of weak investment growth, low productivity and uncertainty about the UK’s relationship with the EU after Brexit”.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
