According to Scotiabank’s Chief FX Strategist Shaun Osborne, the latest Bank of England Decision Maker Panel survey suggests that UK inflation expectations are holding steady. The survey indicates that while 3-month output prices are expected to moderate slightly to 3.6%, 1-year CPI expectations have increased to 2.6% from the previous 2.5%. Additionally, the survey shows continued high wage growth trends, supporting the possibility of cautious rate reductions in the UK in the near future.
Osborne also notes that recent gains in the value of the British pound are supported by technical indicators. The pound has been steadily accumulating value over the past few sessions, with a break of trend resistance from the late August high. This resistance level, now at 1.3095, has become a support level for the currency. The next target for gains is at 1.3175, with further targets at 1.3200 and 1.3225 in the short term.
Overall, the survey data and technical indicators suggest a cautious approach to UK rates and a positive outlook for the British pound in the near future.