- The National Statistics Office of the United Kingdom will publish March data on Wednesday.
- The general inflation of the United Kingdom is expected to cool in March, while the underlying IPC will remain unchanged.
- The United Kingdom CPI data could inject volatility around sterling pound in the middle of a cautious boe.
The United Kingdom Consumer Price Index (CPI) for March will be published by the National Statistics Office (ONS) on Wednesday at 06:00 GMT.
The United Kingdom’s IPC inflation report could significantly impact market expectations on future interest rate cuts of the Bank of England (BOE), which could trigger a great reaction in the pound sterling (GBP).
What to expect from the next inflation report of the United Kingdom?
The United Kingdom consumer price index is expected to increase 2.7% year -on -year (yoy) in March, after an increase of 2.8% in February.
Reading is expected to be distant from the 2.0% target of the BOE.
The underlying IPC inflation is expected to exclude energy, food, alcohol and tobacco prices, increase 3.5% year -on -year in March, without changes compared to February.
According to a Bloomberg survey to economists, official data is expected to show that inflation of services has decreased to 4.8% in March, after staying at 5% in February.
Meanwhile, the British monthly CPC is expected to increase 0.4% in the same period, matching the increase recorded in February.
By anticipating the United Kingdom inflation data, TD Securities analysts said: “We hope that inflation will continue to decrease in March, with the general figure by 2.6% (MKT: 2.7%; previous: 2.8%). Services are the main engine with 4.7% year -on -year at 3.3% year -on -year (previous: 3.5% year -on -year).
How will the United Kingdom consumer price index affect the GBP/USD?
The slight expected cooling in British inflation would clear the path of the BOE to cut rates at 25 basic points (BPS) to 4.25% at its May 8 policy meeting.
Meanwhile, monetary markets are valuing total 75-100 BPS rate cuts this year due to the gloomy economic perspective of the United Kingdom, because of the global tariff war.
In its March monetary policy meeting, the BOE held interest rates at 4.5%, with the voting pattern showing 8-1 in favor of keeping the rates, while a member voted in favor of a cut.
The Bank said in its policy statement that “uncertainty about global commercial policy has intensified” in recent weeks, citing US tariffs. And the responses of other countries.
Therefore, an upward surprise in the general inflation data would press against the expectations of more rates cuts by the BOE after the possible relief in May. In this case, the sterling pound would receive the impulse so necessary, raising the GBP/USD closer to the 1,3300 barrier. On the contrary, the softer inflation readings will probably relive the bets of aggressive rates cuts by the BOE, which could trigger a new bearish trend in the GBP/USD.
Dhwani Mehta, main analyst of the Asian session at FXSTERET, offers a brief technical perspective for the main torque and explains: “The GBP/USD is fighting with the 1,3200 barrier while staying well above all the main simple mobile socks (SMA) daily before the publication of the IP of the United Kingdom. The impulse indicator of the relative force index (RSI) It keeps above 50. A golden crossing is being formed since the 50 -day SMA is about to cross the 200 -day SMA from below.
Dhwani adds: “The torque needs acceptance above the 1,3250 psychological barrier to extend the upward trend towards the threshold of 1,3300. The next upward target is aligned in the maximum of October 2024 of 1,3390. On the contrary, the immediate support is seen in the SMA of 21 days in 1,2958, below which the 50 -day SMA confluence zone will be tested and the 200 -day SMA around 1,2810.
Economic indicator
Consumer Price Index (Yoy)
The IPC publishes it National Statistics and measures prices a basket of goods and services bought by households for consumption. The CPI is the main indicator to measure inflation and changes in consumption trends. A greater result than expectations is bullish for the pound, while a minor reading is bassist.
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Next publication:
LIÉ APR 16, 2025 06:00
Frequency:
Monthly
Dear:
2.7%
Previous:
2.8%
Fountain:
Office for National Statistics
The Bank of England has the task of maintaining inflation, measured by the main consumer price index (CPI), in about 2%, which gives the monthly publication its importance. An increase in inflation implies an increasingly fast increase in interest rates or the reduction of bond purchase by the BOE, which means squeezing the offer of pounds. On the contrary, a drop in the rhythm of price increases indicates a more flexible monetary policy. A higher result than expected tends to be bullish for the GBP.
FAQS inflation
Inflation measures the rise in prices of a representative basket of goods and services. General inflation is often expressed as an intermennsual and interannual percentage variation. The underlying inflation excludes more volatile elements, such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. The underlying inflation is the figure on which economists focus and is the objective level of central banks, which have the mandate of maintaining inflation at a manageable level, usually around 2%.
The consumer price index (CPI) measures the variation in the prices of a basket of goods and services over a period of time. It is usually expressed as an intermennsual and interannual variation. The underlying IPC is the objective of the central banks, since it excludes the volatility of food and fuels. When the underlying IPC exceeds 2%, interest rates usually rise, and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually translates into a stronger currency. The opposite occurs when inflation falls.
Although it may seem contrary to intuition, high inflation in a country highlights the value of its currency and vice versa in the case of lower inflation. This is because the Central Bank will normally raise interest rates to combat the greatest inflation, which attracts more world capital tickets of investors looking for a lucrative place to park their money.
Formerly, gold was the asset that investors resorted to high inflation because it preserved their value, and although investors often continue to buy gold due to their refuge properties in times of extreme agitation in the markets, this is not the case most of the time. This is because when inflation is high, central banks upload interest rates to combat it. Higher interest rates are negative for gold because they increase the opportunity cost to keep gold in front of an asset that earns interest or place money in a cash deposit account. On the contrary, lower inflation tends to be positive for gold, since it reduces interest rates, making bright metal a more viable investment alternative.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
