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Sterling jumps as UK inflation slows less than forecast - REUTERS

MAY 22, 2024


LONDON, May 22 (Reuters) - The pound jumped on Wednesday after data showed UK inflation neared the Bank of England's target in April, but did not slow as much as expected, leaving the chances of a June rate cut unchanged at around 50%.

British consumer prices rose by 2.3% in annual terms in April, slowing from a 3.2% increase in March, the Office for National Statistics said.
The Bank of England and economists polled by Reuters had forecast an annual rate of 2.1%.

Sterling rose by as much as 0.3% to a new two-month high of $1.27520, and was last trading at $1.2749.

The euro fell against the pound to two-month lows and was last down 0.3% on the day at 85.16 pence.
Headline consumer inflation fell, driven in large part by a decline in household energy prices. But other measures of price pressures, such as services inflation, picked up more than expected, complicating the chances that the BoE could cut rates as soon as June.

Pepperstone strategist Michael Brown said the data cast some doubt on the BoE cutting rates as soon as the next Monetary Policy Committee meeting in June. "That said, one must recall that there is still one further inflation report before the June MPC meeting, albeit the bumpier- and slower-than-expected disinflationary path signalled by today's data increases the likelihood that policymakers seek to err on the side of caution, and delay any such cut until August," Brown added.


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