Fed Near Neutral Signals Caution Ahead, Shifting Focus to Fixed Income in 2026 
Today inflation reading will be published from UK at 8:30 GMT. Data set includes Consumer Price index (CPI), producer price index (PPI), and retail price index.
- Inflation readings will be closely monitored by markets as it will be key concern of Bank of England (BOE), before it considers raising rates.
- However, Bank of England (BOE) governor Mark Carney has indicated while releasing quarterly inflation report that inflation would remain weak and even may drop into negative territory, however that would not be sufficient enough for BOE to consider additional stimulus, as it prefers not to chase low oil price.
Past trends -
- CPI has been hovering close to zero percent. In January reading was deep in negative territory, fell by -0.9% mom, bounce back since in February and March, however still subdued at 0.2%
- PPI registered first monthly positive number in February 2015, first time since April 2014. However it is still not strong enough to exert any price pressure.
- RPI last year mostly remained in positive territory however in later half of the year and especially January saw sharp decline. RPI has been hovering in negative territory since January. However decline has slowed to -0.2% in March after slumping -0.8% in January.
Expectation today -
- CPI is expected to grow at 0.4% mom, in line with recent rise in oil price.
- PPI is expected to grow at 0.2%.
- RPI is expected to turn move higher by 0.4%.
- House prices are also expected to move up in April by 7.7% from a year ago.
Market impact -
- Better than expected inflation reading would provide the necessary boost for pound as rate hike bets would once again push pound higher. However some headwinds expected since dollar is performing strong today.
- Weaker than expected result would push pound lower, however it would remain in line with Bank of England expectations, so downside remains limited unless further cue appears.
Pound is currently trading at 1.562 against dollar, key support lies at 1.555-1.56 and resistance at 1.582-1.584 and 1.595-1.6.
