The EUR/GBP ended up the day after the United Kingdom inflation data for April, which significantly surprised upwards, in relation to both the consensus and the estimation of the BOE, FX analysts of Danske Bank report.
More cuts in August and November
“The general inflation stood at 3.5%year -on -year (cons: 3.3%, previous: 2.6%, BOE: 3.4%) and services in 5.4%interannual (Cons: 4.8%, previous: 4.7%, BOE: 5.0%). Like the data of the PMI for April, this points to a more cautious cuts cycle by the BOE negative for GBP. “
“In addition, we point out that the annual indexation of a series of services took place in April, such as telephone and internet invoices. The effects of energy prices, an increase in water invoices, a new circulation tax for cars and the moment of Easter raised yesterday’s figures, which makes it difficult to evaluate the underlying price pressures.”
“The markets reduced the assessment of the cuts, valuing just less than 40 basic cuts of cuts for the end of the year. We expect two more cuts in August and November.”
Source: Fx Street
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