This week's data showed that core inflation rose 7.1% y/y in May, marking the biggest increase in more than thirty years, while the all-inclusive measure steadied at 8.7% y/y and far from the central bank's 2% target.
Meanwhile, the labor market remains tight and wages increased substantially according to the latest report. This has been a constant source of worries for policymakers, since it produces risk of a wage-price spiral and makes controlling inflation much harder. Speaking on Sky News yesterday, Governor Bailey warned that current levels of wages are "unsustainable". 
Responding to these data points, the Bank of England decided to reaccelerate the pace of monetary firming and raised rates by an aggressive 0.5%, following two straight conservative 25 bps moves . In typical BoE fashion, policymakers did not commit to the next steps and Mr Bailey stressed that they are "not signaling what's gonna come next", on Sky News. 
However, officials kept the door open to more rate hikes and markets expect further policy firming. With high inflation, tight labor market and elevated wages, it is extremely hard to imagine that officials can stay on the sidelines.
There is more than a month though, until the next meeting and the central bank is walking a tightrope. It has to balance between mitigating the high cost of living, while not sparking a recession and a borrowing crisis.
UK100 is having a mixed month but heads towards losing weak, entering its sixth negative day. High inflation and the BoE's aggressive action push it lower, threatening new monthly lows. This brings the 2023 lows in the spotlight (7,202), but fresh impetus will be likely needed for those to be challenged.
From a technical prospective, the decline is stretched and UK100 may find an opportunity to rebound, but the upside is unfriendly starting from 7,580-90. A thick daily Ichimokou Cloud looms, along with multiple EMAs and the descending trendline form the April highs.
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 08 Dec 2023 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/june-2023