Soft UK CPI data took some wind from sterling's sails - BBH

Research Team at BBH, notes that the soft UK CPI data (0.3% year-over-year, vs. expectations of an unchanged reading of 0.5%) took some wind from sterling's sails.

Key Quotes

“The weakness was in the core rate, which unexpectedly fell to 1.2% from 1.5%. Sterling was already stalling ahead of the report, so the key to the near-term outlook may be how far sterling retreats.

After all, the April CPI report has little bearing on the outlook for rates, and whatever impact it may have under normal circumstances, the referendum will alter the outlook one way or another. The $1.4440-1.4450 area may be key. A break of it could warn of another 1.0-1.5 cent decline. On the upside, the $1.4530-1.4545 area has capped upticks since the May 3 reversal.”