GBP/USD Rate Surges to Two-Month High After Inflation News
Today, the Consumer Price Index (CPI) figures for the UK were published. According to ForexFactory:
→ Annual CPI: actual = 2.3%; expected = 2.1%; previous = 3.2%.
→ Annual Core CPI: actual = 3.9%; expected = 3.6%; previous = 4.2%.
Thus, it can be asserted that:
→ The current inflation level is at its lowest since 2021.
→ It is close to the target levels of 2%.
However, economists polled by Reuters had expected a sharper drop to 2.1%, based on falling energy prices.
Additionally, inflation in the services sector (a key indicator monitored by the Bank of England due to the dominance of this sector in the UK economy) only slightly decreased to 5.9% from 6%.
As a result, CNBC reports that market participants have reduced the likelihood of the Bank of England easing monetary policy:
→ The probability of a rate cut in June has decreased to 15% compared to 50% before the inflation news was published.
→ The probability of a rate cut in August was estimated at 40% compared to 70% before the publication.
The currency market reacted with a surge in volatility ? the GBP/USD rate jumped to a two-month high, reaching the 1.27555 level. However, as the market absorbed the data, the price began to gradually decline.
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