Today’s most crucial economic event is the Bank of England monetary policy announcement at midday. It is anticipated that the BoE will keep rates unchanged at 5.25 percent.
UK CPI inflation fell to 3.2 percent in March (expected 3.1%) signalling that the cost of goods and services is dropping. However, inflation still remains above the 2 percent target inflation rate, indicating there is still work to be done by the BoE.
One member of the Monetary Policy Committee voted for a rate cut in March by 25 basis points, the remaining eight voted for no change. Markets will keep a close eye on the votes from the members of the committee to see their stance on future rate cuts.
It is expected that the Bank of England will cut rates by 0.25 percent in June or August. There will be two CPI inflation releases before the next MPC interest rate decision in June, so both of these releases will be closely monitored.
Pound Sterling has been on the backfoot against the other currencies in the G10 leading up to the interest rate decision today. The dovish stance from the BoE has shown no signs of support for the Pound this week.