The Pound Sterling (USD) is soft, down a modest 0.2% against the US Dollar (USD) and a midperformer among the G10 in an environment of broad USD strength, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
Markets digest as-expected CPI, price in BoE cut
"The UK CPI data were largely in line with expectations, coming in marginally above expectations on headline (3.6% y/y vs. 3.5% exp. & 3.8% prev.) while core was released as expected at 3.4% y/y. The UK budget is scheduled for next Thursday, November 26, and headline risk remains elevated with a focus on the government’s revenue generating measures."
"Last week’s OBR forecast adjustment softened the need for drastic fiscal changes, offering markets some reassurance about the government’s ability to adhere to self-imposed fiscal rules. BoE rate expectations have softened modestly, pricing 22bpts of easing for December and 52bpts by June, up 2bpts on the day."
