UK Inflation Drop May Lead to Lower Interest Rates

GBPUSD Analysis – The British pound remained stable at $1.27, close to its lowest point since March 5th. This is happening as more people think the Bank of England might reduce interest rates this summer. This belief comes after a surprising drop in the UK’s inflation rate. The most recent CPI report showed a decline to 3.4% in February, marking the lowest level since September 2021 and just below the anticipated 3.5%.

Furthermore, the core inflation rate also fell to 4.5%, the lowest in nearly two years and slightly under the expected 4.6%. Now, investors are looking forward to the Bank of England’s next move regarding interest rates, which is set to be announced on Thursday. Many think the central bank will keep the rates steady at 5.25%. However, UK officials are now more inclined to consider lowering rates in August. This differs from the European Central Bank (ECB) and the Federal Reserve (Fed) in the US, which are expected to move in June.

UK Inflation Drop May Lead to Lower Interest Rates