Long

UK Inflation Target Hit, Sterling Up (Short-Term?)

British pound strengthens against euro and dollar after inflation dips to Bank of England's target.

* UK inflation fell to 2.0% in May, meeting the BoE's target for the first time in nearly three years.
* This news sparked a modest rally in the pound, with GBP/EUR rising to €1.1860 and GBP/USD reaching $1.2727.
* However, services inflation remains high, prompting speculation that the BoE may hold off on interest rate cuts despite falling headline inflation.
* Market expectations for an August rate cut have softened to around 36%, down from 55% before the inflation data.
* The Bank of England is expected to maintain interest rates at its meeting on Thursday.

Future movement of GBP likely hinges on upcoming UK data:

* Wednesday's release of June CPI data could further weaken the pound if it confirms expectations of persistently high services inflation.
* The BoE's monetary policy decision on Thursday is also a key event, with limited forward guidance potentially disappointing GBP investors.

Euro subdued by lackluster German economic data:

* The euro showed little reaction to Germany's latest Zew economic sentiment index, which missed forecasts.

Overall, the outlook for GBP remains uncertain. While lower headline inflation provided a temporary boost, concerns about sticky services inflation and the BoE's monetary policy stance could weigh on the pound in the coming days.

signalmastermind

Expert Trading Signals & Market Analysis

Start 14-Day Free Trial : signalmastermind.com/register/?lid=18
Telegram Channel : t.me/SignalMasterMind_Free
LinkedIn : linkedin.com/company/signal-mastermind

Also on:

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.