FxPro Forex Analysis: GBP weaker on Inflation Report

The initial reaction to the Bank of England Inflation Report has been for sterling to weaken, with cable moving from 1.68 to 1.6735. The headlines have shown that the Bank still expects inflation to remain below target over the forecast period and this is main reason why sterling has fallen. The Bank acknowledges that slack in the economy has been erased but is greater than previously thought owing to developments in the labour market. Market now more doubtful of 2014 rate increase, in contrast to indications from speeches and MPC minutes seen over the past couple of months.