The GBP/USD fell from recent maximums, since retail price data confirmed continuous deflation in store prices, despite an increase in food inflation. With the inflation of services decreasing and the economic risks increasing, the bank of England is expected to cut the rates at 25 basic points next week, with the markets anticipating a complete percentage point of relief during the next year, BBH FX analysts report.
The prices in United Kingdom stores still in deflation despite the increase in food prices
“The GBP/USD backed away from the maximum of several months of yesterday in 1,3444. The price pressure at the United Kingdom points remains in deflation. The BRC price index fell -0.1% interannual in April (consensus: -0.2%) compared to -0.4% in March. The breakdown showed that the inflation of food prices accelerated while the fall in the prices in the prices moderated. “
“The Bank of England (BOE) has room to resume relief policy next month because the downward risk for the United Kingdom economy is growing and the inflation of services is cooling. The markets have completely discounted a cut of rates of 25 basic points at the next meeting of May 8 and 100 basic points of total relief during the next 12 months.”
Source: Fx Street
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