UK: CPI inflation probably rose to 2.6% - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that the main data of the day comes in the UK, where CPI inflation probably rose to 2.6% from 2.3%, and core CPI probably rose to 2.2% from 1.8%.

Key Quotes

“The UK, with import prices boosted by the pound’s fall last year, is going to see softer CPI readings later than other economies. Will the CPI data, followed by unemployment and wages tomorrow then Easter-boosted retail sales on Thursday, prompt fears of increased MPC hawkishness? It’s just about possible.”

“But GBP/USD has clearly risen much more than would appear justified by yield differentials as GBP shorts have been squeezed. The picture is even starker in real yield terms. The short GBP position has been significantly reduced but it isn’t completely exorcised yet. Still, the next three days are likely to see the last of the sterling short-covering rally.”