GBP/USD on the back foot: UK inflation data below expectations - Scotiabank

Analysts at Scotiabank explained that UK inflation data came in below expectations for Mar, with CPI rising 0.1% M/M (against forecasts for a 0.3% rise) and 2.5% Y/Y (2.7% expected).

Key Quotes:

"The data dampened BoE rate hike expectations (83% price now, according to Bloomberg data, versus 90%+ at the start of the week) and put the GBP under significant pressure on the day. We think the BoE is likely to look through the softness (inflation remains above target) and we continue to anticipate a May tightening.

Cable slipped sharply in earlier trade but price action looks to be stabilizing around the mid-way point of the Apr rally (50% retracement). We spot short-term resistance at 1.4235 and look for the GBP to regain positive momentum near-term above here. Medium-to longer term trend signals remain bullishly aligned, suggesting that the pound should continue to attract support on dips."