Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Market update: UK's April CPI data crucial for potential June interest rate cut

The anticipated drop in UK's CPI data for April is a key determinant for a potential interest rate cut in June by the Bank of England.

Source: Getty Images

On Wednesday, the UK's Consumer Price Index (CPI) data is expected to decline for both headline and core measures. Consensus estimates project the headline measure dropping significantly from 3.2% to 2.1%. This lofty expectation could lead to market disappointment if the figures come in higher than anticipated. Even a small miss to the upside would still represent substantial progress.

Economic calendar

Source: DailyFX

In April of last year, services inflation re-accelerated more than expected, continuing into May and June, prompting the Bank of England to raise interest rates during its June 2023 meeting. However, this year’s guidance suggests that the data may be less extreme due to generally lower headline prices. Services prices, often index-linked to headline prices, are not expected to pass through as significantly as in 2023.

UK Services CPI Year-on-Year Change (April -July)

Source: Refinitiv

A UK inflation print that meets or undershoots expectations could catalyse bearish sentiment for sterling, particularly given the waning GBP/USD price action below the 1.2736 level. Given the high inflation expectations, even a slight upside miss might still exert bearish pressure, reflecting the overall progress towards the 2% inflation target.

The presence of upper wicks and small candle bodies in GBP/USD charts suggests diminishing bullish momentum, potentially leading to a lower move if catalysed by appropriate data. Should prices cap at 1.2736, a downward movement would remain constructive following a better-than-expected CPI print. The pound has rallied against the dollar since April's lower US CPI print. A short bias would be invalidated at 1.2800, with support and a short target set at 1.2585.

GBP/USD daily chart

Source: TradingView

Markets currently view a June cut as a 50/50 outcome ahead of UK CPI – enhancing its importance in the lead up to the central bank meeting. A softer CPI print, followed by dovish comments from BoE officials creates an environment where the first rate cut since the hiking cycle may be upon us sooner than expected. However, if inflation fails to match up to the lofty expectations, pricing may reflect a preference for August or even later in the year.

Implied rate cuts into year end (in basis points)

Source: Refinitiv

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Discover how to trade the markets

Learn how indices work – and discover the wide range of markets you can trade on – with IG Academy's free ’introducing the financial markets’ course.

Put learning into action

Try out what you’ve learned in this index strategy article risk-free in your demo account.

Ready to trade indices?

Put the lessons in this article to use in a live account – upgrading is quick and easy.

  • Get fixed spreads from 1 point on FTSE 100 and Germany 40
  • Protect your capital with risk management tools
  • Trade more 24-hour markets than any other provider

Inspired to trade?

Put your new knowledge into practice. Log in to your account now.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.