UK May CPI data came in below expectations, reinforcing bets the Bank of England will hold rates steady in the near term.
The British Pound fell to a weekly low of 1.3410 against the US Dollar after UK inflation data undershot market forecasts. Annual consumer price growth held at 2.8% in May, matching April’s pace but missing the 2.9% consensus, while monthly inflation slowed to 0.2% from 0.7% in April, below the 0.4% expected.
Core CPI rose to 2.6% year-on-year from 2.5% in April, still below the 2.7% forecast. The softer prints reduce pressure on the Bank of England to tighten policy, weighing on the Pound as traders price in a prolonged pause.
Markets now await the Federal Reserve’s policy decision later Wednesday, with Chair Kevin Warsh expected to hold rates steady amid elevated US inflation and political pressure to ease.