COMMENT-Will UK CPI be a game-changer for sterling?

Hotter than expected U.S. CPI data was a game-changer for the dollar and Federal Reserve rate expectations last week; will UK inflation data do the same for the pound and Bank of England rate expectations this week?

The consensus expectation for UK March CPI, due on Wednesday at 0600 GMT, is that it will fall to 3.1% YY (Reuters poll), from 3.4% in February.

A CPI print of 3.0% or less would get doves cooing for a BoE rate cut in May or June, and could exert further downward pressure on GBP/USD.

Cable plumbed a fresh five-month low of 1.2409 - three cents below last week's peak - after Tuesday data showed the UK unemployment rate rose to a higher than expected 4.2% in February. Hotter than expected UK wage growth provided solace for hawks opposed to a BoE rate cut before September.

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