Higher UK CPI only a false hope for BoE tightening expectations - ING

The research team at ING expects headline UK CPI to have accelerated to 2.4% YoY in March, driven primarily by rising food prices (The squeeze intensifies).

Key Quotes

“Coupled with a potential slowdown in wage growth (Wed), this points to falling real incomes. While rising inflation is starting to concern some of the hawks at the BoE, we think the MPC as a whole will continue to “look through” surging prices and focus instead on what higher inflation means for households (ie negative effect given the squeeze in real wages). Hence, should the today’s rise in CPI lead to market pricing in more hawkish BoE stance, its effect on GBP should be only temporary as the BoE is unlikely to follow through. EUR/GBP to move towards the 0.8550 level.”