Anna 
In Wednesday’s European session, the Pound Sterling (GBP) rallied to 1.2750 following the release of data from the United Kingdom (UK) Office for National Statistics (ONS), which reported a slower-than-expected decline in the Consumer Price Index (CPI) for April. While UK inflationary pressures remained elevated compared to estimates, they showed a notable softening from March levels, indicating that the Bank of England’s (BoE) higher interest rates are exerting downward pressure on inflation.
The slower decline in UK inflation is anticipated to dampen expectations for BoE rate cuts, which financial markets had been anticipating to commence from the August meeting. Notably, the annual service inflation, a pivotal component, exhibited a modest deceleration to 6.0% from the previous reading of 6.1%, underscoring its significance in constraining inflation towards the 2% target.
Speculation regarding BoE’s potential reduction in borrowing costs in August gained traction after BoE Deputy Governor Ben Broadbent remarked on Monday, stating, “If things continue to evolve with its forecasts—forecasts that suggest policy will have to become less restrictive at some point—then it’s possible Bank Rate could be cut sometime over the summer,” as reported by Reuters.
