Foreign Exchange: Post-CPI
Sterling spiked higher after above expectations U.K. CPI, which accelerated to 4.4% y/y. The number was the highest y/y release since the series begin and well above the 4.1% y/y consensus. Cable moved up to 1.9083 and EUR-GBP moved back in to 0.7800 before sterling turned lower due to the combination of higher inflation and softer growth. Elsewhere, U.K. house prices rose 0.6% y/y according to U.K. government data for June versus 3% in May. Today’s releases suggest that the BoE will remain on hold for the foreseeable future.