UK Core CPI and Services Inflation Supportive of GBPUSD
UK headline CPI came in at 6.8% y/y, which was lower than the previous print of 7.9% y/y. However, core CPI is 6.9% y/y, the same as the prior month.
Inflation is down from current cycle highs but is still far above the Bank of England's (BoE) target of 2%.
The Office for National Statistics (ONS) said that lower gas and electricity were the biggest contributors to the drop in CPI, with food inflation rising less than the previous comparative period.
However, the BoE will be monitoring core and services inflation closely. The fact the core CPI did not move from the prior print, and that services inflation increased to 7.4% (7.2%) will concern the central bank.
Wage growth will also pose a headache, growing at the fastest rate since records began in 2001.
Another 25 basis point hike in September by the BoE is a distinct possibility.
In response to the CPI release, GBPUSD has moved positively with its green 5-hour EMA crossing above its orange 10-hour EMA (black ellipse) and the stochastic popping positively (red ellipse). If the stochastic moves above 80 and holds (blue arrow), an underlying positive momentum will be supporting cable on the hourly period..png)
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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