Traders ramped up bets for the Bank of England (BOE) to lower interest rates in January in following the release of weaker-than-expected UK inflation data on Wednesday.
Markets are currently pricing in a more than 60% chance of a cut in January, up from 44% on Tuesday. A move by May is now almost fully priced in, according to Bloomberg.
U.K. consumer prices rose 1.3% from a year earlier, the least since November 2016, while the core rate also declined, the official data released Wednesday showed.
With the rate cut odds on the rise, the path of least resistance for GBP/USD appears to be on the downside. The pair is currently trading at 1.3045, having hit a high of 1.3057 in early Asia.
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