GBP traded flat against other major currencies in the European session on Monday as investors’ focus shifted to the release of the crucial UK CPI data for April later this week, which could determine whether the Bank of England will cut its Bank Rate at its June meeting.
Wednesday’s UK consumer price index (CPI) report is expected to show the British headline annual inflation rate dropped from 3.2% in March to 2.1% in April, nearing the BoE’s 2% target.
If the UK inflation data matches expectations, it will reinforce the bets for a June rate decrease. According to Reuters, markets price a 55% probability of the move. Overall, the British central bank is seen to reduce its Bank Rate twice this year.
The crucial inflation release will be preceded by the BoE governor Andrew Bailey’s speech on Tuesday. Investors will scrutinize his remarks for clues on how many rate decreases might be delivered by year-end.