- UK headline inflation rates fall but core rate rises
- US debt ceiling impasse continues, boosting US dollar
The GBP/USD pair is trading lower for the third consecutive day. It currently stands at 1.2374 (down 0.33%). Earlier today, GBP/USD reached a low level of 1,2369. It was its lowest point since April 18. Later today, the FOMC will release the minutes from its May meeting.
UK inflation is a mixed bag
The UK’s closely watched inflation report for the month of April was disappointing. The headline inflation rate fell from 10.1% to 8.7%. This is hopefully the last time inflation will be in double digits. The reading was still above the estimated 8.2%.
The core CPI, the most important measure of inflation, showed no positive signs. Core rate rose from 6.2% to 6,8%. The Bank of England’s tenacious fight against inflation has taken a major step backwards after the unexpected increase. Forecasters expected the core CPI rate to stay at 6.2%. Governor Bailey has two public appearances scheduled today. We can expect to hear him mention the inflation data.
The BoE increased rates by 1%, bringing cash rate up to 5.25%. But inflation remains persistent. IMF projected that UK’s inflation would drop to around…