June UK CPI fell to 2.6% YoY, below forecasts, but failed to halt the pound’s fifth consecutive daily decline against the dollar.
The British pound’s decline moderated slightly on Wednesday after UK inflation cooled more than expected in June, though GBP/USD remained on track for a fifth straight daily loss. The pair dipped to 1.3350, its weakest level in over a week, before stabilizing near 1.3400 amid thin trading conditions.
Headline Consumer Price Index (CPI) inflation slowed to 2.6% YoY in June, down from 2.8% in May and below the 2.7% consensus. Services inflation eased to 3.6% from 3.7%, while core inflation held steady at 2.6%, defying expectations of a slight dip. The data arrives just over a week before the Bank of England’s 30 July policy decision, weakening the case for an immediate rate hike.
Markets had priced in one more BoE hike to 4.00% in the coming months, but the softer inflation print pushed expectations further out. Despite the downside surprise, the pound showed little sustained reaction, reflecting lingering uncertainty over the UK’s monetary policy outlook.