GBP/USD opens flat ahead of UK’s CPI, Powell’s speech eyed

• The cable is consolidating ahead of the announcement of the UK’s CPI.
• The BOE has raised its interest rates despite the intensifying fears of stagflation in Europe.
• The first Powell’s speech after raising the interest rates will hold significant importance.

The GBP/USD is trading lackluster in a narrow range of 1.3170-1.3177 in early Tokyo as investors are limiting their positions ahead of the announcement of the UK’s Consumer Price Index (CPI) numbers by the Office for National Statistics, which is due on Wednesday. A preliminary estimate for the yearly UK’s CPI is likely to land at 5.9% against the previous print of 5.5%.

It is worth noting that the Bank of England (BOE) raised its interest rates by 25 basis points (bps) on Thursday. This was the third time that the BOE raised their benchmark rates by a quarter to the percent consecutively. Also, the BOE is the first central bank that raised its interest rates after the pandemic of Covid-19 when all economies were keeping their interest rates near zero to bring their economic growth near the pre-Covid levels.

To tame the soaring inflation, the BOE has been aggressively tightening its liquidity despite the intensifying fears of stagflation in Europe. The escalation of the Ukraine crisis post the Russia's invasion of Ukraine has raised concerns over the growth of the European economy. The consequences of supply chain bottlenecks and roaring commodity prices may halt the economic growth in addition to rising prices of the products.

Meanwhile, the US dollar index (DXY) is trading subdued on Monday as investors await a speech from the Federal Reserve (Fed)’s Chair Jerome Powell, which is due on Wednesday.