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GBP/USD holds near 1.34 after cooler UK inflation data

UK June CPI eased to 2.6% year over year, but markets still see an 82% chance of a BoE rate hike by November 5.

Reported · Written up by our desk · Major Pairs

The pound steadied in the North American session as cooler UK inflation data reduced pressure on the Bank of England, even as Middle East tensions continued to lift oil prices. FXStreet said GBP/USD was trading around 1.3377, holding near 1.3375 on the day’s moves.

During the European session, UK CPI for June dipped from 2.8% to 2.6% year over year, while core CPI was unchanged at 2.6% year over year. The data eased expectations for the BoE, yet traders were still pricing an 82% chance of a rate hike by the November 5 meeting, according to Prime Terminal data cited by FXStreet.

FXStreet also linked the shift in currency sentiment to an oil shock, noting WTI crude rose more than 2.5% to $86.70 after the Gulf War boosted prices. It added that petrol prices in July have risen nearly 24%, still shy of recovering the $90 level WTI saw as a floor in June.

Looking ahead, FXStreet said traders were awaiting US Initial Jobless Claims for the week ending July 18, alongside S&P Flash PMIs and the Federal Reserve’s July 29 monetary policy decision. Money markets priced a 65% chance the Fed would keep rates unchanged at the meeting, down from 78% the prior day, based on Prime Terminal data.

Latest closeWTI crude $87.52 ▲3.1%|GBP/USD 1.338 ▼0.4%

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