Broader trends remain constructive – Scotibank

UK inflation data for July was lower than expected. Headline prices fell by 0.2% m/m, leaving inflation at 2.2% over the year. Core prices rose 3.3% in July, compared with an expected 3.4% and 3.5% in June. Even sticky services inflation eased slightly more than forecast but remains elevated at 5.2% y/y, notes Shaun Osborne, chief currency strategist at Scotiabank.

Minor dips in the 1.28 area remain well supported

“Markets are still pricing in a less than 50% risk of a BdE rate cut in September, but continue to anticipate 50bp of further easing by the end of the year. It’s not much different from earlier in the week.”

“Sterling’s recovery from last week’s lows has eased a bit this morning, but the losses are not technically too significant and may already be stabilizing. Broader GBP/USD trends remain constructive after last week’s strong – bullish – reversal. Minor dips in the 1.28 area should remain well supported.”