The pound received two blows: wage growth remained stagnant at 2.8% y/y and then inflation tumbled to 2.5% y/y, lower than early expectations. This weighs on the BOE’s rate decision in May.
Here is their view, courtesy of eFXdata:
TD Research discusses GBP outlook and keeps flagging near-term downside risks (see here), noticing that a mix of Brexit headlines and a dreadful CPI report has socked the pound with the with the one-two punch.
“The inflation miss was the big kicker, leaving GBP as the big laggard on the week. …The result is that it is likely to lag the broader G10 for now, with GBPUSD most likely to make a break below 1.40 (also seen near the 50dma).
For its part, EURGBP popped after the data and should continue to nudge higher in the aftermath, although the ECB next week should keep it rangebound,” TD argues.
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