Sterling Holds Ground as Traders Wait on BoE, Jobs Data

The pound barely budged Wednesday after softer-than-expected UK inflation data, with traders holding fire ahead of Thursday's labour market report and the Bank of ​England's policy meeting.

Consumer price inflation came in at 2.5% year-on-year for March, below the 2.7% consensus estimate and down from February's 2.8% print. Core inflation, stripping out food and energy, printed at 3.2% versus the 3.4% expected. Services inflation – the BoE's preferred domestic price gauge – eased to 4.8% from 5.1%, a tick below the 4.9% forecast.

Sterling dipped briefly to $1.2830 after the release before recovering to $1.2865, roughly where it had traded before the data crossed. Against the euro, the pound held at €0.8570, flat on the session.

The muted reaction reflected a market that had already priced in a softer print, several traders said. The bigger question is whether the BoE's rate-setting committee sees enough disinflation momentum to signal a cut at the June meeting, or whether it holds the line through the summer.

Thursday's labour data will feed directly into that calculus. Average weekly earnings, excluding bonuses, are expected to slow to 5.6% from 5.8%. A print below 5.5% would strengthen the case for an early cut, traders said. A number above 5.8% would push the first move deeper into the second half.