UK CPI softens, reducing expectations for further Bank of England rate hikes and weighing on the Pound Sterling.
The British Pound declined against the US Dollar, trading below 1.3400 after UK inflation data came in softer than anticipated. The report prompted investors to scale back bets on aggressive Bank of England tightening, weakening demand for GBP.
Prior to the release, markets had priced in a higher probability of another rate hike, but the latest CPI figures fell short of expectations. Meanwhile, stronger-than-expected US retail sales bolstered the Greenback, adding downward pressure on GBP/USD.
The pair extended losses as traders reassessed monetary policy outlooks, with the US economy showing resilience while UK inflation cools.