Data showed U.K. annual CPI inflation dropped sharply to 4.6% in October, below economists’ forecasts and cementing the view that interest rates have likely peaked. The chances of a Bank of England surprise hike in December were already very low, but this morning’s U.K. inflation figures for October are further helping a dovish case. U.K. money markets are now close to pricing in a rate cut in June but ING still considers U.K. pricing to be “conservative” relative to the U.S. and eurozone, meaning sterling risks underperforming as the economy deteriorates.
