A UK central bank official dismissed speculation of an earlier rate cut than the Fed. However, GBP/USD remained under pressure.

The Pound Sterling briefly rallied in early trading on Thursday (11/April) thanks to a more hawkish statement from a UK central bank official. However, GBP/USD fell back to around 1.2530s at the start of the New York session. Cable was helpless against the Greenback's might amid a flood of positive data from Uncle Sam's country.

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Megan Greene, one of the external members of the BOE's Monetary Policy Committee, expressed her concern that very strong wage growth would push UK inflation to stay above the central bank's target for longer. She also reminded that service inflation in the UK is much higher than in the United States.

High inflationary pressures will require a high interest rate policy. Therefore, he dismissed speculation of an earlier BOE rate cut than the Fed.

"The market now expects the Bank of England to cut interest rates earlier and by more than the Federal Reserve this year," Greene said in an article in the Financial Times. "The market is moving rate cut bets in the wrong direction."

"Market momentum is pricing in later rate cuts by the Fed as economic growth remains strong. In my view, a rate cut in the UK should also be a long way off," Greene emphasized.

Current market data suggests reduced odds for a BoE rate cut scenario starting in June. However, the sterling remained weak against the US dollar due to the release of some new data from the United States, which was too surprising. A better US economic situation would allow the Fed to keep interest rates high for longer than the BOE -regardless of how individual BOE officials view it.

The publication of US consumer inflation data showed figures outperforming everyone's forecasts. The March 2024 US producer inflation data released this evening was somewhat disappointing, but the annual growth still ticked from 1.6% to 2.1%. The weekly jobless claims data was also better than expected.

Market participants are now looking forward to the release of several important economic data from the UK tomorrow, including gross domestic product (GDP), industrial production, manufacturing production, and trade balance. Consensus expects the data to show a sustained recovery in economic activity by February 2024. If the data misses forecasts, the market will likely advance the BOE's rate cut timing forecast while triggering a further Sterling slump. Conversely, better data could bolster Sterling.