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British currency reaches 10-month minimum on dismal British inflation data
On Wednesday, the British pound headed south to the lowest value for 10 months versus the broadly stronger greenback because suddenly dismal British inflation data decreased chances for an August rate lift by Britain’s key financial institution.
The currency pair GBP/USD reached a minimum of 1.3011, which is the weakest outcome since September 5, last year.
The UK currency went down to the day’s minimum after data disclosing that inflation in Great Britain managed to ascend at a slower than anticipated tempo in June, thus contributing to the Bank of England's tough dilemma whether to lift interest rates in August or not.
As the Office for National Statistics informed, the annual rate of inflation in the United Kingdom jumped by approximately 2.4% last month, ruining hopes for a 2.6% ascend.
Underlying inflation edged up by nearly 1.9% on a year-over-year basis, decelerating from 2.1% in May and also confounding estimates of 2.2%.
As for consumer prices, they stood still for the month in June, decreasing from 0.4% in May and in contrast with estimates of 0.2%.
The inflation report showed up just a day after data unveiling that wage surge in the United Kingdom decelerated to its weakest value for six months for the three months to May, notwithstanding record employment.
With inflation outpacing wage growth British customers are currently experiencing a cost of living squeeze, which makes an August interest rate lift less real.
The UK currency was already on the defensive having dived nearly 1% versus the evergreen buck on Tuesday in the face of Brexit uncertainty.
Demand for the US currency was still backed because optimistic remarks from the head of the Fed underpinned hopes that the key financial institution of America is going to gradually lift interest rates.
The overall market sentiment is risk-on. The S&P 500 index (US 500) is getting close to the all-time high. Oil is recovering quickly from its recent losses.
What will happen? The FOMC statement will be published at 21:00 MT (GMT+3) on Wednesday, July 28…
PMI reports from the EU, the UK, and the USA will be released during the day!