UK July inflation hit 2.9% YoY, driven by regulated energy price hikes, while core and services inflation eased slightly.
GBP/USD climbed 0.2% to near 1.3650, its highest level in over four months, supported by a rising 50-day EMA around 1.3450. The pair remains 200 pips above key moving averages, with minimal downside pressure during the session.
UK July headline inflation accelerated to 2.9% YoY from 2.6% in June, matching consensus, while core inflation held at 2.6%. Services inflation, a key gauge for the Bank of England, eased to 3.4% from 3.6%. The increase was largely attributed to a 13% rise in the household energy price cap, with another hike scheduled for October.
The BoE had already signaled expectations for inflation to peak near 3.2% in Q4, suggesting the rise was anticipated rather than a surprise. Core output producer prices firmed to 2.8% YoY, indicating potential pipeline pressures, though wage and services dynamics remain the focus for rate decisions.