Forex Top Team

Pound struggling near lows, impact of slowing inflation growth remains

Pound struggling near lows, impact of slowing inflation growth remains

Following the release of the UK’s June Consumer Price Index (CPI), which showed a significant decline from the previous month, the pound remains near its lows despite a temporary halt in the sharp decline. The year-on-year figure of +7.9% fell well below market expectations of +8.2% and significantly decreased from the previous figure of +8.7%. This has led to increased selling pressure on the pound. Market participants have factored in a terminal interest rate level for UK policy rates below 6%, down from the previous range of 6.25% to 6.50%. As a result, UK bonds are being bought, leading to a decrease in yields.

Considering these developments, the GBP has experienced a sharp decline. Additionally, given that neighboring EUR is also experiencing a calming of inflation, it is reasonable to anticipate an increase in selling pressure on the GBP gradually.

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