Pound Rallies After UK Inflation Meets Consensus Estimates

The British pound today rallied higher in the early London session following the release of the latest UK inflation data, which was in line with consensus estimates. The GBP/USD currency pair extended yesterday’s gains and rallied into the American session to print new weekly highs driven by positive investor sentiment.
The GBP/USD currency pair today rallied from a low of 1.2541 in the early London session to a high of 1.2626 in the American session and was headed higher at the time of writing.
The currency pair traded with a slight negative bias during the Asian session driven by investor uncertainty as they waited for the start of the London session. The release of the UK consumer price index data for May by the Office for National Statistics boosted the pair by meeting expectations. The headline CPI print came in at 0.3% translating into an annualized 2.0% to fall within the Bank of England‘s inflation target. The producer price index data and the retail price index prints were both mostly in-line with expectations, which boosted the pair.
The cable rallied into the American session despite the release of weak UK CBI total trends data. However, the pair’s gains were limited by investor concerns regarding Boris Johnson‘s massive lead in the Conservative Party leadership contest. Investors are worried about the likelihood of a hard Brexit under Johnson’s premiership.
The pair’s short-term performance is likely to be affected by today’s FOMC rate decision and tomorrow’s BoE rate decision.
The GBP/USD currency pair was trading at 1.2633 as at 15:04 GMT having risen from a low of 1.2541. The GBP/JPY currency pair was trading at 136.90 having rallied from a low of 135.77.

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