The euro dropped 0.1% to 83.92 pence, its lowest since August 2022 , and the pound also firmed against the dollar, gaining 0.13% to $1.299.
Strong increases in hotel prices were partly to blame for the higher than expected reading, underscoring the Bank of England’s concerns about price pressures in the services sector.
“Today’s inflation data won’t be what the doctor ordered… This marked a third consecutive month where services CPI beat expectations,” said Sanjay Raja, chief UK economist at Deutsche Bank. “Undoubtedly, today’s services print raises the bar for an August rate cut,” he said.
Pointing to the rise in live music and accommodation prices, however, Raja noted that “it’s certainly very possible that some Taylor Swift effects were at play here” and that BoE rate setters could look past some of the inflation upside. Taylor Swift has been touring in Britain.
Nonetheless, after the data rate futures showed investors saw a roughly one in three chance of a BoE rate cut on Aug. 1, the date of its next scheduled monetary policy announcement, down from almost 50-50 before the inflation data.
Sign up here.
Reporting by Alun John and Rae Wee; Editing by Amanda Cooper and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
