 Sterling edged modestly higher today after UK inflation surprised to the upside, though gains were restrained. CPI and core CPI both accelerated in June, with goods inflation jumping sharply. The move raises questions about tariff passthrough effects and complicates the BoE's path ahead. While a BoE rate cut is still likely in August, the case is now less clear-cut. The Monetary Policy Committee is clearly divided, and hawks like Chief Economist Huw Pill, who dissented in the cut in May, could push back again against easing. Still, even if the easing cycle proceeds, there is little room for BoE to deviate from one cut per quarter to keep policy tight enough to anchor inflation expectations. For the week so far, Dollar leads FX rankings, followed by Loonie and Swiss Franc. Yen is the weakest performer, with Kiwi and Aussie also under pressure. Sterling and Euro sit in the middle. Overall, the rankings reflect a cautious and not particularly risk-friendly backdrop...... |
