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GBP/USD rises to a three-month high as UK inflation meets forecasts

Sterling pushed to 1.3613 after UK consumer inflation quickened to 2.9% in July, while markets trimmed expectations for a Bank of England rate hike by year end.

Reported · Written up by our desk · Major Pairs

GBP/USD climbed to a three-month high at 1.3613 on Wednesday as investors digested fresh UK inflation and labour market data, according to Action Forex.

UK consumer inflation accelerated to 2.9% in July from 2.6% in June, while core inflation was steady at 2.6%. After the release, markets slightly scaled back expectations for a Bank of England rate hike before year end.

Labour market data also fed into the move, with unemployment holding at 4.9% above expectations and payrolled employment down by 86,000 year-on-year. Regular pay growth stayed relatively stable at 3.5%.

The outlook for the pound also received support from a weaker US dollar, as soft US economic data led investors to reduce expectations of further Federal Reserve tightening. Action Forex also noted that elevated oil prices and uncertainty tied to the US-Iran conflict continue to pose inflation risks for the UK, with near-term GBP/USD technicals pointing to potential pullbacks toward 1.3572 and 1.3500.

Latest closeGBP/USD 1.354 ▲0.3%

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