Forex
Home›Forex›Major Pairs›UK CPI eyed as inflation may rebound, raising BoE hike…
UK CPI eyed as inflation may rebound, raising BoE hike odds for GBP
The July CPI is expected to rise 2.9% year over year, up from 2.5% in June, with energy price moves tied to Middle East developments potentially increasing near-term rate-hike pressure on the Bank of England.
The UK Office for National Statistics is set to release its high-impact July Consumer Price Index report at 06:00 GMT, a data point that could shift market expectations for a Bank of England interest-rate hike in September and add volatility to the British pound (GBP), FXStreet reports.
Economists expect headline UK CPI to climb 2.9% year over year in July, after 2.5% in June, which would be the highest reading in four months and above the BoE forecast of 2.8%. Core CPI, which excludes energy, food, alcohol, and tobacco, is expected to ease slightly to 2.5% year over year, while service inflation is expected at 3.4% year over year, according to FXStreet.
The report also points to a potential rise in the monthly CPI, seen up 0.3% in July after 0.1% in June. TD Securities highlights upside risks to the UK disinflation path, citing vulnerability in food prices through fertilizer costs and weather, the possibility that airfare inflation could reaccelerate as airlines pass along higher fuel expenses, and signs that core goods inflation may be turning higher.
FXStreet says the upcoming CPI print will help gauge whether UK disinflation trends are reversing and whether that is significant enough to nudge the BoE at its September 17 monetary policy meeting. It also notes the CPI covers a period that included renewed Middle East hostilities, which lifted oil prices by roughly 22%.