UK Inflation Surprise Dims Hopes for BoE Rate Cut in August; GBP/USD Spikes
Hotter Inflation Clouds BoE Rate Cut Outlook
The inflation report followed weaker-than-expected GDP numbers, which had fueled speculation about a BoE rate cut. Notably, the UK economy expanded 0.5% in the three months to May, down from 0.7% in April. Meanwhile the economy contracted by 0.1% on a monthly basis, supporting a more dovish BoE policy stance.
Simon Pittaway, Senior Economist at the Resolute Foundation, commented on the GDP report, stating:
“With negative growth in the last two months of data, the UK’s late 2024/early 2025 growth spurt looks to be losing steam. You can see this more clearly in the 3m-on-3m data, which has fallen in recent months. Expect this to fall further in next month’s Q2 data as March’s upgraded monthly growth figure (0.4%) falls out of the 3m window.”
Ahead of today’s inflation figures, BoE Monetary Policy Committee member Catherine Mann remarked on inflation levels, stating:
“We have seen wage rates come down, so people are getting wage increases, but not at the rate in the past. And we’ve seen price inflation come down quite a bit, but it’s still a challenge because it’s still well above our 2% objective.”
This article was originally published by a www.fxempire.com
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