UK Inflation Softens to 6.7% Creating Uncertainty About a BoE Rate Hike

UK Inflation Report

The UK inflation report for August was in the spotlight this morning. A pickup in UK inflationary pressure would force the Bank of England (BoE) to keep rates higher at the expense of the UK economy.

However, the UK annual inflation rate softened from 6.8% to 6.7% in August. Economists forecast an inflation rate of 7.0%. Consumer prices increased by 0.3% in August versus a 0.4% decline in July. Economists forecast a 0.7% jump in consumer prices.

There was more interest than usual in the numbers. With the UK heading for a recession, softer inflation rates could ease pressure on the BoE to push rates higher and tip the UK economy into a deeper recession.

GBP to USD Reaction to the UK Inflation Report

Before the UK inflation report, the GBP to USD pair rose to a pre-stat high of $1.23970 before falling to a low of $1.23821.

However, in response to the UK inflation report, the GBP to USD pair tumbled from $1.23856 to a low of $1.23332.

This morning, the GBP to USD was down 0.32% to $1.23514.