GBP weakened against most of its major rivals in the European session on Tuesday as investors prepared for the release of the UK’s consumer price index (CPI) data for December on Wednesday.
Economists predict tomorrow’s report will show that the headline CPI increased 2.6% YoY in the final month of 2024, unchanged compared to the previous month, and the core CPI rose 3.4% YoY, easing from 3.5% YoY in November.
Hotter-than-expected CPI prints could prompt markets to trim their bets on rate cuts by the Bank of England (BoE).
Meanwhile, markets continue grappling with concerns about the UK’s fiscal sustainability. Chancellor Rachel Reeves is to testify before the British MPs this afternoon. Investors will pay attention to her remarks on how she intends to stick within her fiscal rules amid rising borrowing costs.