GBP/JPY Eases From Highs After Weaker UK Inflation Data
MarketPulse | Feb 14, 2024 07:18AM ET
- UK inflation unchanged in January
- Markets expect BoE rate cut in Q2
- GBP/JPY pares gains after hitting 8.5 year high
UK inflation data this morning will have been a welcome surprise for the Bank of England but there’s still a long way to go.
Unfavorable base effects were expected to lift headline and core CPI last month but in both cases, they stayed at the same level. A small win but a win nonetheless for the BoE.
It was already expected to fall back to target in the second quarter before rebounding a little later in the year and this now increases the possibility of inflation undershooting the 2% target in the coming months and not rebounding as strongly.
While it’s tempting to get carried away with the release – as markets have repeatedly over the last year – the BoE will need more evidence the inflation is running lower than it assumed a couple of weeks ago before it considers cutting rates.
But based on today and if repeated in the coming months, a second-quarter cut is very possible.
The pound fell sharply against the yen after the data and continues to trade near the day’s lows.
Source – OANDA
This occurred shortly after the GBP/JPY pair hit an eight-and-a-half-year high above 190 on Tuesday, seeing resistance around the rising trend line. It initially did so with decent momentum but the inflation data may have changed that.
The first test below now becomes the November to January highs followed by the rising trendline from the early January lows. A break of these could be a very bearish development.
Original Post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.