GBP/USD tests 1.30 as UK inflation cools faster than expected
Sterling pushed toward the 1.30 handle after UK inflation data came in below forecasts, boosting hopes of a smoother path for Bank of England easing.
The British pound advanced toward the 1.30 handle against the dollar on Wednesday after UK inflation data came in below expectations, reinforcing hopes for a smoother path toward Bank of England rate cuts.
Headline consumer prices rose at their slowest annual pace in more than two years, driven by a sharper-than-expected slowdown in services inflation, a metric the BoE has watched closely.
The reading prompted markets to trim bets on any near-term BoE tightening, with the pound instead drawing support from the broader improvement in the UK's inflation trajectory.
UK government bonds rallied on the news, with yields falling across the curve as traders repriced the likely pace of future policy easing.
Key Takeaways
- UK headline CPI eased to its lowest annual rate in over two years.
- GBP/USD rose to test the 1.30 handle, its strongest level since spring.
- Markets trimmed expectations for further near-term BoE tightening.
- Gilts rallied as traders priced in a smoother path toward rate cuts.
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