Uk Cpi For August Expected To Decline

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Uk Cpi For August Expected To Decline

UK Cpi For August Expected To Be Near 2%

According to forecasts, the UK CPI for August will likely be around 2.00%. The ONS will release August's CPI on Wednesday.

The UK CPI is an important metric used by the Bank of England to determine its monetary policy. This also makes the UK CPI an important economic release for the Pound Sterling (GBP).

Boe To Keep Rates Unchanged

In August, the Bank of England lowered its policy rate by 25 bps and set a new interest rate of 5.00%. At that time, 5 members voted for a rate cut while the others didn't! At that time, the rate cut had a bearish impact on the GBP and pushed the GBP/USD towards 1.2664.

According to experts, the UK CPI for August will be around 2.2%, similar to the reading from July 2024. The core CPI (annual) is expected to be 3.5%, a little higher than the 3.3% reading of last time. Also, the monthly index will likely jump by 0.3% in August after showing a decline of 0.2% in July.

The timing of the UK CPI release is also important, as the BoE meeting is scheduled the very next day. So, there's a good chance that the UK CPI will also impact the decision of the UK policymakers.

Many experts believe that the bank of England will likely keep the rates on hold till November 2024. The BoE forecasts a reading of 2.75% for inflation in the next few months before moving below 2.00% in 2025.

lower CPI reading will allow the Bank of England (BoE) to further cut the policy rate. In turn, this will weaken the GBP against other currencies. At the same time, we also can't ignore that other central banks are also moving towards monetary easing.

In such a scenario, the currency with the higher interest rate will be the one to benefit. In simple words, the interest rate difference between the USD and the GBP will decide the fate of the GBP/USD.

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