US Vs UK Inflation: Looking For Support For Cable

Things are different across the pond

Tomorrow we will get the release of inflation data from the UK, just before markets open. Economists expect the Headline annual CPI to come in at 2.2%, a slight increase in the pace from 2.1% prior. However, it’s the core rate that the regulators follow, and we can expect that to stay at 2.0%, bang in line with the BOE’s target.

To further support the notion that inflation isn’t getting out of hand, expectations are for monthly CPI to drastically slow down to 0.2% from 0.6% in the prior month.

Moving the market

Of course, the UK is in a somewhat different situation, as covid restrictions still remain in place until the end of the week.

The Delta variant remains much more of a concern, which is weighing on the rebound.

The major difference is that the BOE hasn’t committed to allowing inflation to rise above target, unlike the Fed. So, while inflation remains where it is, the BOE could keep policy steady.

However, an increase above expectations could restart rumors of BOE tightening and push Cable higher.

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