UK inflation data aligns with forecasts, reducing pressure on the Bank of England to cut rates despite weak labor market figures.
The British Pound (GBP) trades at 1.3640 against the US Dollar (USD) in European trading, reflecting resilience despite a stronger US Dollar Index (DXY) near 99.10. The GBP’s gains come as market expectations for Bank of England (BoE) rate cuts soften following July’s inflation data.
UK headline CPI rose to 2.9% year-over-year, matching consensus, while core inflation slightly exceeded forecasts at 2.6%. Services inflation eased to 3.4%, in line with expectations. Analysts note that the data, combined with weak labor market figures, has tempered BoE rate cut pricing for the remainder of 2024.
The USD strengthens broadly as investors weigh potential US sanctions on Iran, which could push oil prices higher and lift Treasury yields. GBP/USD maintains a bullish bias, holding above its 20-day exponential moving average.