UK: Further evidence of disinflation would weaken the GBP – MUFG

The Pound Sterling (GBP) has outperformed at the start of 2024. GBP outperformance at the start of 2024 will be tested in the week ahead, economists at MUFG Bank report.

Will investor concerns over a higher risk of persistent inflation in the UK ease further? 

The releases of the latest UK CPI and labour markets reports in the week ahead will provide important tests for the GBP. The reports will be scrutinized closely to better assess whether the disinflationary developments evident in December will be sustained. 

Further evidence of disinflationary pressures poses the main downside risk to GBP outperformance at the start of this year.