As traders anticipated the Bank of England's (BoE) announcement today, the GBPUSD surged beyond 1.2700 on a relatively calm Wednesday. Despite the recent UK economic data falling short of expectations, the BoE is expected to maintain the interest rate at 5.25%. However, the data is not sufficient to arouse concerns about a recession.
The UK Inflation Was Eased To 2% Target Level
On Wednesday, the Pound Sterling (GBP) surpassed the critical resistance level of 1.2700 due to the UK Office for National Statistics (ONS) releasing data that suggested a decrease in price pressures in May, as had been anticipated. For the first time in over three years, the UK's annual headline inflation decreased to the central bank's target of 2% from 2.3% in April. The core Consumer Price Index (CPI), which excludes volatile food and energy prices, decreased from 3.9% to 3.5% during the same period.
Headline inflation increased by 0.3% every month, which was slightly below the anticipated 0.4% increase. In addition, the report indicated that the annual Producer Price Index (PPI) for Core Output experienced a substantial increase of 1.0% in May, as opposed to a 0.3% increase in the previous month.
