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Analysts at Scotiabank noted that sterling is soft, with Cable reaching its lowest level since Dec. Apr UK CPI data showed prices generally softening, counter to expectations for steady inflation.

Key Quotes:

“CPI rose 0.4% M/M against expectations of a 0.5% gain, for a 2.4% Y/Y print (versus +2.5% expected); core CPI continued the retreat that began at the start of the year by easing to +2.1% Y/Y, the lowest reading in more than a year.”

“Weaker than expected CPI casts further doubt about the BoE’s ability to tighten interest rate policy in Aug (markets pricing in now 5.5bps of a 25bps increase).”

“Meanwhile, the UK government continues to struggle to advance its Brexit policy. Cable downside risks remain.”