UK Inflation Jumps to 3.0%, Raising Doubts Over March Boe Rate Cut; GBP/USD Spikes

Expert Views on the Boe’s Monetary Policy Conundrum Bob Elliott, Chief Investment Officer at Unlimited Funds, Warned that Wage Growth Is Keeping Services Inflation Elevated. Services Inflation Makes It Harder for Core Inflation to Deckline:

“Continued Elegated Wage Growth Has Kept Services Prices in the Economy Elevated As Well, and WitH It Core Inflation Above Target. There Was Some Hope That This Wuld Moderate Further, But That Looks IncreAASINGLY LIKELY GIVEN THE RECENT WAGE DATA RELEASES. ”

Elliott Added that Despite Inflation Conceerns, The Boe Recently Cut Rates. Two Policymakers Pushed for A 50bps Move to Support Economic Growth. Markets have priced in Another 50-60bps in Rate Cuts for 2024.

Meanwhile, UK Economic Growth Further Complicates the Boe’s Outlook. The Economy Expanded 0.4% MONT-ON-MONTH IN DECEMBER, UP from 0.1% in November. The UK Data is Muddying the Monetary Policy Waters. A Pickup in Economic Activity, Rising Wages, Low Unemployment, and Higher Inflation Make the Case for Rate Cuts Less StraightForward.

GBP/USD RESPONSE TO INFLATION DATA Ahead of the UK Inflation Report, The GBP/USD Droped to a Low of $ 1.26022 Before Climbing to a High of $ 1.26394.

However, After The Inflation Report, The GBP/USD FELL TO A LOW OF $ 1.26122 Before Rising to A High of $ 1.26339.

On Wednesday, February 19, The GBP/USD WAS UP 0.07% to $ 1.26215.