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UK CPI due Wednesday, GBP/USD faces test near May and July highs

Headline inflation is expected to ease to 2.7% year over year in June, while core CPI is forecast at 2.5%, figures that are likely to influence expectations for the BoE at its July 30 meeting.

Reported · Written up by our desk · Central Banks

The UK Office for National Statistics will publish June Consumer Price Index data on Wednesday at 06:00 GMT, a release investors expect to affect British Pound sentiment because UK inflation is a key input for Bank of England policy decisions, FXStreet reports.

Consensus forecasts call for headline UK CPI to rise 2.7% year over year in June, slightly below May, with monthly inflation seen up 0.1%. Core CPI, which strips out volatile food and energy, is expected at 2.5% annually, down a tenth of a percentage point from May.

The most recent BoE meeting on June 18 left the bank rate unchanged at 3.75%, but a 7-2 vote split and a more hawkish tone were reflected in the decision, FXStreet notes. After the meeting, investors largely shifted toward a steady approach by the BoE, with markets pricing nearly 43 basis points of tightening by year end and expecting no change at the July 30 gathering.

On the currency pair outlook, FXStreet highlights that GBP/USD has recovered over multiple weeks but ran into an initial ceiling around the 1.3550 to 1.3560 area near July highs. It also points to additional resistance levels at 1.3653, followed by 1.3868, if the pound extends higher.

Latest closeGBP/USD 1.348 ▼0.5%

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