UK August CPI +2.2% vs +2.2% y/y expected

• Prior +2.2%
• Core CPI +3.6% vs +3.5% y/y expected
• Prior +3.3%

Coming into today, traders had been pricing in ~63% odds of the BOE keeping the bank rate unchanged tomorrow. And the inflation numbers here pretty much solidifies the notion that they will keep rates unchanged in September. That especially since services inflation ticked back higher from 5.2% in July to 5.6% in August.

The BOE has pointed to services inflation being stubborn and a key one they’re watching. So, with this report, it shouldn’t change the view that they are looking for more evidence of less sticky inflation before further loosening the restrictiveness of monetary policy.

GBP/USD is nudging just a little higher on the day to 1.3175 currently, up from around 1.3160 earlier.

This article was written by Justin Low at www.forexlive.com.