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Sterling faces pressure as UK core inflation slows but trend improves

ING says falling food and petrol prices and a softer core services measure point to benign domestically generated inflation, but GBP is weaker on the day.

Reported · Written up by our desk · Major Pairs

ING told FXStreet that UK inflation is trending in the right direction despite slightly higher core data, pointing to improving underlying price pressures.

In ING’s view relayed by economist James Smith, headline inflation fell more than expected for a second straight month as food prices declined, alongside falling petrol prices that support the “core” story going into the Bank of England debate.

For services, ING cited a Bank of England preferred “core services” measure excluding volatile and indexed categories, which it said fell from 3.8% to 3.6%. The firm added that low private-sector wage growth supports its view that domestically generated inflation is benign right now.

FXStreet also noted Sterling was weaker after the UK June core inflation release, and that EUR/GBP may have set a significant low at 0.8455.

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