FX.co ★ British Pound Weakens Slightly After Inflation

The British pound experienced a slight decline, settling at approximately $1.29, as market participants assessed an inflation report that fell short of expectations and looked ahead to the upcoming Spring Statement. In February, the inflation rate in the UK decreased to an annual 2.8%, falling just short of the predicted 2.9%, though aligning with forecasts made by the Bank of England. Notably, services inflation remained consistent at 5%. Despite this dip, the central bank anticipates it to be short-lived, projecting an increase in inflation toward 4% later in the year. Market odds currently suggest a 92% likelihood that the Bank of England will execute a 25 basis points rate cut in August, with a 60% chance of another reduction before the year concludes. Concurrently, Chancellor of the Exchequer Rachel Reeves is poised to unveil the economic forecast and declare substantial reductions in UK government expenditure, totaling billions of pounds.