While the UK PM has leapt into action to call an early election:
He may have jumped from the frying pan into the fire. Goldman Sachs is tipping no help for Sunak from the Bank of England, changing its forecast from a June rate cut to August now.
- Given firmer incoming price and wage data, we no longer expect a June Bank Rate cut.
- First, services inflation came in at 5.9% year-on-year in April, well ahead of consensus expectations and the MPC‘s May projection of 5.5% year-on-year.
GS are not alone in switching away from a June forecast.
I’m digging out more on this.
ICYMI, the UK inflation data is here from earlier this week:
- UK April CPI +2.3% vs +2.1% y/y expected
- Sterling gains as UK inflation slows by less than anticipated
- Traders move to pare back BOE rate cuts odds after UK CPI report
This article was written by Eamonn Sheridan at www.forexlive.com. Source