Fresh out this morning, the UK’s inflation rate surprised to the downside, with headline CPI falling to 2.6% in March — lower than the 2.7% analysts had forecast. This unexpected drop, driven largely by falling petrol and diesel prices, has paved the way for a potential interest rate cut by the Bank of England next month.
BoE Rate Cut Now on the Cards
With inflation easing more sharply than expected, and growth forecasts under pressure from ongoing global trade tensions, markets are now increasingly confident that the BoE will move to cut rates in May.
The inflation decline also reflects softer consumer demand and growing caution, particularly as the trade backdrop remains unsettled.
More Data on the Way: EU CPI and US Indicators
Later today, the economic calendar picks up pace with key releases from both sides of the Atlantic:
- EU CPI figures will offer a glimpse into how inflation is evolving across the eurozone.
- US Retail Sales and Industrial Production reports will provide crucial insight into the strength of the US economy heading into Q2.
These releases could influence currency movements and shape expectations for central bank policy on both continents.
Powell Speech in Focus
At 6:30pm UK time, all eyes will be on US Federal Reserve Chair Jerome Powell, who is set to speak on the state of the US economy, global trade dynamics, and the Fed’s outlook on interest rates.
His tone could have significant implications for the dollar and wider market sentiment.
GBP/USD Hits 6-Month High on Trade Hopes
In currency markets, Sterling has gained ground, with the pound-to-dollar exchange rate hitting a fresh six-month high yesterday. Reports of positive momentum in UK-US trade negotiations have added to the bullish sentiment surrounding the pound.
Manage Risk, Maximise Opportunity
As inflation trends shift and central banks prepare for policy changes, currency markets are likely to remain dynamic. Whether you’re sending international payments, managing overseas contracts, or hedging exposure, it’s crucial to stay ahead of the curve.
Qumoney’s expert team is here to help. Get in touch today for tailored FX strategies and actionable market insight.