UK CPI will be key for Sterling this week. Economists at ING expect a cool-down in prices to weigh on GBP.

All about inflation

“Wednesday’s inflation data in the UK will be a make-or-break event for the Pound. If our expectations are correct and CPI data indicates enough of a cool-down in prices to convince the Bank of England to pause tightening in June, the downside risks for Sterling are quite sizeable.”

“Should the Dollar find more support this week, we could see a decisive acceleration in Cable’s correction on diverging Fed-BoE diverging narratives and the 1.2250-1.2300 region being explored, while we see upside risks for EUR/GBP into the 0.8750-0.8800 area in the near term.”