BOE prepares for the cut of rates in the midst of the fall of the United Kingdom inflation and energy cost concerns

• The annual inflation of the United Kingdom fell to 2.6% in March 2025, less than expected, with notable decreases in recreation, culture and transport prices.
• The markets have a price in a probability of 85% of a reduction of rates from the Bank of England at the May meeting.
• Analysts discuss whether inflation has touched the bottom, with concerns about increasing energy and water invoices potentially pushing the highest inflation in the coming months.

The National Statistics Office (ONS) published for March this morning. The data revealed that the United Kingdom fell to 2.6% in March 2025, below 2.8% in February and below the expected 2.7%. The greatest price decreases come from recreation and culture, particularly games, toys and hobbies (-4.2%) and the data processing equipment (-5.1%). Transport also played a paper, with engine fuel prices by 5.3%.

Price increases slowed down for restaurants and hotels (3%, the lowest since July 2021), housing and public services (1.8%) and food and non -alcoholic beverages (3%). On the other hand, the prices of clothing and footwear rose 1.1%, which reflects typical increases as spring fashions reached stores.

increased by 0.3%, slightly lower than the increase of the previous month and below the 0.4%predictions. , which excludes volatile elements, decreasing to 3.4% of 3.5%.

Inflation in the future and implications for the Bank of England (BOE)

After inflation data, markets have a price in about a probability of 85% of the BOE in the central banks of May.

Source: LSEG

The most important question for consumers, at least, is whether this is as good as it will be. There is a school of thought among analysts that inflation has probably touched background and that markets and consumers should prepare for greater inflation in the future.

The reason is to a large extent that to do with energy prices, as he thinks he expressed it well, to affirm that energy invoices have mainly helped inflation due to the great price drop after the 2022 peak. However, as of April, energy invoices will add 0.8 percentage points more to the annual CPI than in March. Water invoices have also increased significantly this month.

With this in mind, ING forecasts put the April CPI figure at 3.2%, increasing to 3.5% or perhaps even a little higher towards the end of the third quarter.

Personally, I do not see such a large leap in April largely in the back of global uncertainty, which I think is already affecting demand and spending habits. This could lead to consumers to spend less and prioritize savings due to an uncertain economic perspective and, therefore, help maintain global inflation under control.

Of course, this will also depend on how tariff negotiations are agitated, since this could, in theory, also lead to an increase in inflation, thus denying my evaluation of less demand and constant inflation.

The inflation of the services also remains uncomfortably high, but is in the objective of reaching the forecast figure of Boes.

In general, an interesting period ahead for the economy of the United Kingdom, something with which the rest of the world also dealt with most 2025.

Technical analysis: GBP/USD

Looking GBP/USD from a technical point of view, the upward rally has broken over the resistance level in 1,3261. However, GBP/USD needs to register a daily closure above 1,3261 to materialize more profits.

The RSI of 14 periods is also approaching the territory of overbample, which could hinder the most upside down.

As discussed in yesterday’s article .

A modest recovery for it is what prevented progress yesterday, and the weakness of today’s early session is allowing the cable to move higher.

Yesterday, I keep my analysis, this movement is being largely driven by the weakest US dollar instead of the GBP force.

GBP/USD daily graph, April 16, 2025

Source: TrainingView.com

Support

Endurance

Most read: