European session review: GBP trades mostly lower as weaker-than-expected inflation figures heighten speculation over prospect of negative rates in UK
20.05.2020, 12:13

European session review: GBP trades mostly lower as weaker-than-expected inflation figures heighten speculation over prospect of negative rates in UK

Time Country Event Period Previous value Forecast Actual
06:00 United Kingdom Producer Price Index - Output (YoY) April 0.3% -0.4% -0.7%
06:00 United Kingdom Producer Price Index - Input (YoY) April -3.1% -8.7% -9.8%
06:00 United Kingdom Producer Price Index - Input (MoM) April -3.8% -4% -5.1%
06:00 United Kingdom Producer Price Index - Output (MoM) April -0.2% -0.5% -0.7%
06:00 United Kingdom Retail Price Index, m/m April 0.2% 0% 0%
06:00 United Kingdom HICP ex EFAT, Y/Y April 1.6% 1.4%
06:00 United Kingdom Retail prices, Y/Y April 2.6% 1.6% 1.5%
06:00 United Kingdom HICP, m/m April 0% -0.1% -0.2%
06:00 United Kingdom HICP, Y/Y April 1.5% 0.9% 0.8%
08:00 Eurozone Current account, unadjusted, bln March 33.8 40.7
09:00 Eurozone Harmonized CPI April 0.5% 0.3% 0.3%
09:00 Eurozone Harmonized CPI ex EFAT, Y/Y April 1% 0.9% 0.9%
09:00 Eurozone Harmonized CPI, Y/Y April 0.7% 0.4% 0.3%


GBP traded mostly lower against other major currencies in the European session on Wednesday as the release of the UK's cooler-than-forecast inflation data raised speculation that the Bank of England (BoE) could cut interest rates below zero and increase its asset purchases to support the country's economy, hit by COVID-19 pandemic. The pound fell against EUR, CHF, CAD, NZD and AUD, but was little changed against USD and JPY.

The Office for National Statistics (ONS) reported that the UK's consumer price inflation decelerated to 0.8 percent y/y in April from 1.5 percent y/y in March. Economists had forecast the rate to slow to 0.9 percent y/y. That was the lowest rate since August 2016 and significantly below the BoE's 2 percent target. Meanwhile, core inflation, which excludes energy, food, alcoholic beverages and tobacco, eased to 1.4 percent y/y in April from 1.6 percent y/y in March.

A separate report from the ONS revealed that output prices fell in April for the first time since June 2016. According to the report, output prices dropped 0.7 percent y/y in April after a 0.3 percent y/y advance in March. Economists had forecast a 0.4 percent decrease. That was the first decline in factory prices since June 2016 and the highest since March 2016. At the same time, input prices fell the most since December 2015.

The UK's chancellor of the exchequer Rishi Sunak warned on Tuesday that the country is facing "a severe recession, the likes of which we haven't seen" and that an immediate bounceback is unlikely.

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