- The United Kingdom National Statistics Office will publish April IPC data on Wednesday.
- Inflation is expected to be measured by the CPI, be much higher than in March.
- The GBP/USD torque quotes about its maximum of 2025 and seeks to move beyond it.
The United Kingdom (United Kingdom) will publish the data of the Consumer Price Index (CPI) for April on Wednesday at 06:00 GMT. The report, published by the National Statistics Office (ONS), has a relevant impact on the Esterlina Libra (GBP) due to its possible effect on future monetary policy decisions of the Bank of England (BOE).
Inflation is expected to be measured by the CPI, increased 1.1% in monthly terms, much more than 0.3% registered in March. The annual figure is expected to be 3.3%, also exceeding 2.6%. Finally, it is forecast that the annual underlying IPC will reach 3.7% after registering 3.4% in the previous month.
What to expect from the next inflation report of the United Kingdom?
The United Kingdom CPI is expected to almost double the target of 2% of the BOE. The news, although discouraging, would not be a surprise.
The last decision of the BOE on monetary policy was to reduce the reference interest rate to 4.25% from 4.5%, with five of the nine members of the Monetary Policy Committee (MPC) supporting such a decision. Two other voting members sought a greater cut, while the other two preferred to keep the rates without changes.
In the accompanying statement, those responsible for the policy said: “There is also a lot of uncertainty for global developments, partly due to changes in global commercial policies. We are evaluating what this could mean for the inflation of the United Kingdom closely.” The officials also added: “We expect an increase in inflation this year. It is likely to temporarily rise to 3.7%, partly due to the highest prices of energy. Inflation is expected to return to the goal of 2% after that.”
Uncertainty has dominated the messages of the central banks since the president of the United States (USA) Donald Trump arrived at the White House with his protectionist policies. Huge tariffs represent a risk to global growth and inflation. While the United Kingdom is among the economies less affected by Trump’s decision, he is not exempt from suffering an economic setback due to taxes.
The markets are cautiously optimistic in the midst of a 90 -day break in the encumbrances and a reduction in retaliation tariffs between Washington and Beijing. Even so, it is worth noting that tensions remain at the bottom, with ongoing trade negotiations without progressing.
The senior economist of Deutsche Bank, Sanjay Raja, adds: “April inflation will present the greatest evidence for the monetary policy committee so far this year.”
How will the United Kingdom consumer price index affect the GBP/USD?
The increase in inflation is within the predictions of the BOE, but that does not make it less worrying. In general terms, higher CPI figures of the anticipated would suggest that the BOE will adopt a more aggressive position and refrain from trimming interest rates, which would result in a stronger GBP. The opposite scenario is also valid, with softer inflation pressures than anticipated leaving the door open for additional rate cuts.
Before the announcement, the GBP/USD pair is comfortably traded above the level of 1,3300, approximately 100 pips below the 2025 peak in 1,3445 in the middle of a wide weakness of the US dollar. The dollar fell under sales pressure after Moody’s Investors Service, a qualification agency, reduced the sovereign credit rating of the United States to AA1 on Friday, expressing concerns about the increase in debt.
Valeria Bednarik, FXSTERET chief analyst, hopes that GBP/USD reach new annual maximums in the next few days. “Given the wide weakness of the USD and the increase in price pressures in the United Kingdom, it is likely that the GBP/USD pair will resume its advance and challenge the annual peak.”
Bednarik adds: “From a technical point of view, the GBP/USD is in a consolidation stage since mid -April. The daily graph shows that the mobile socks have been flattened, reflecting the lack of directional force, however, the tor The decline around the 1,3250 region, while the base of the monthly range is in 1,3140. “
Finally, Bednarik states: “A constant advance beyond the level of 1,3400 should favor a tour beyond the maximum of the year and to the 1,3500 area, while additional profits expose the price zone of 1,3560, where the GBP/USD reached its maximum in September 2022.”
FAQS inflation
Inflation measures the rise in prices of a representative basket of goods and services. General inflation is often expressed as an intermennsual and interannual percentage variation. The underlying inflation excludes more volatile elements, such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. The underlying inflation is the figure on which economists focus and is the objective level of central banks, which have the mandate of maintaining inflation at a manageable level, usually around 2%.
The consumer price index (CPI) measures the variation in the prices of a basket of goods and services over a period of time. It is usually expressed as an intermennsual and interannual variation. The underlying IPC is the objective of the central banks, since it excludes the volatility of food and fuels. When the underlying IPC exceeds 2%, interest rates usually rise, and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually translates into a stronger currency. The opposite occurs when inflation falls.
Although it may seem contrary to intuition, high inflation in a country highlights the value of its currency and vice versa in the case of lower inflation. This is because the Central Bank will normally raise interest rates to combat the greatest inflation, which attracts more world capital tickets of investors looking for a lucrative place to park their money.
Formerly, gold was the asset that investors resorted to high inflation because it preserved their value, and although investors often continue to buy gold due to their refuge properties in times of extreme agitation in the markets, this is not the case most of the time. This is because when inflation is high, central banks upload interest rates to combat it. Higher interest rates are negative for gold because they increase the opportunity cost to keep gold in front of an asset that earns interest or place money in a cash deposit account. On the contrary, lower inflation tends to be positive for gold, since it reduces interest rates, making bright metal a more viable investment alternative.
Economic indicator
Underlying IPC (Yoy)
The IPC publishes it National Statistics and measures the change in the prices of a basket of goods and services bought by households for consumption. “Underlying” excludes products whose volatility depends on certain seasons, such as food and energy, to capture a precise estimate of spending. The CPI is the main indicator to measure inflation and changes in consumption trends. A greater result than expectations is bullish for the pound, while a minor reading is bassist.
Read more.
Next publication: MIÉ MAY 21, 2025 06:00
Frequency: Monthly
Dear: 3.6%
Previous: 3.4%
Fountain: Office for National Statistics
The Bank of England has the task of maintaining inflation, measured by the main consumer price index (CPI), in about 2%, which gives the monthly publication its importance. An increase in inflation implies an increasingly fast increase in interest rates or the reduction of bond purchase by the BOE, which means squeezing the offer of pounds. On the contrary, a drop in the rhythm of price increases indicates a more flexible monetary policy. A higher result than expected tends to be bullish for the GBP.
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.
