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British Pound: UK Inflation Remains at Multi-Decade Highs, GBP/USD Nudges Higher

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  • UK headline inflation touches 9.1% y/y.
  • GBP/USD drifts lower on US dollar strength.

Price pressures in the UK remain inflated and at multi-decade highs. The latest inflation report from the Office for National Statistics (ONS) shows annual headline inflation at 9.1%, in line with market expectations, while monthly inflation rose by 0.7%. The annual figure is the highest reading since the series began in 1997.

Core inflation fell in May to 5.9% y/y from 6.2% in the prior month. The CPI index including owner occupier’s housing costs (CPIH) rose by 7.9% in the 12 months to May 2022, up from 7.8% in April.

British Pound: UK Inflation Remains at Multi-Decade Highs, GBP/USD Nudges Higher

For all market-moving economic data and events, refer to the DailyFX calendar

Today’s data will keep pressure on the Bank of England to hike rates aggressively. The Bank of England (BoE) recently warned that inflation could hit 11% this year before turning lower. The UK central bank will need to balance how to keep the economy expanding at the same time as pushing down on inflation.

GBP/USD remained little changed to marginally lower, due mainly to US dollar strength. Later today we have the first of Fed chair Jerome Powell’s testimony and this is likely to be the main driver of today’s price action. GBP/USD still remains within last Thursday’s bullish candle – 1.2040/1.2405 – while a zone of resistance around 1.2340 will provide initial resistance.


Jun 22, 2022 | DailyFX
Nick Cawley, Strategist

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