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Pound sterling will likely drift lower following an on-target inflation release.
Headline UK CPI inflation rose to 2.9% y/y in July from 2.6%, a figure that met expectations. The monthly rate shifted from 0.1% m/m to 0.3% in July.
There was something of a 'hawkish' outturn from the core component, which rose to 0.2% m/m in July, beating estimates of 0.1%.
Nevertheless, the headline takeaway is that there's nothing alarming in the data and probably note enough to materially shift the thinking on what the Bank of England might do in the coming months.
The current expectation is that two rate hikes will be delivered by early 2027 in order to deal with the seemingly persistently high inflation dynamics.
The pound-to-euro rate edges higher to 1.1689 at the time of writing, putting it more or less where it was ahead of the inflation release.
The trend this week has been a soft one for the pair, and these numbers don't discount further softness over the coming days.
