GBP depreciated against most of its major rivals in the European session on Monday as investors continued to weigh the Bank of England's interest rate path while awaiting the release of the UK consumer price index (CPI) data for November later this week.
Last week’s attempt by the Bank of England to downplay markets’ bets for the policy easing next year had little success. Investors still price in four rate cuts by the British central bank in 2024. However, this implies a slower pace of rate reduction compared to the potential cuts by the European Central Bank and the Federal Reserve.
On Wednesday, the UK inflation report for November will be released, which could cause a repricing of the BoE's rate cut bets. Economists expect the CPI data will show a decrease in the headline annual inflation to 4.4% from 4.6% in the previous month and a slip in the core annual inflation to 5.6% from 5.7% in October. If price growth moderates faster than anticipated, it will support the case for the BoE to start rate-cutting next year.