Headline UK Consumer Price Index (CPI) is projected to reach 2.7% year-over-year in June, a fractional decline from the previous month. On a monthly basis, inflation is anticipated to increase by 0.1%, following a 0.2% rise in May. Analysts are particularly focused on core inflation, which excludes volatile items and is a key indicator for the Bank of England's monetary policy decisions.
The Bank of England is widely expected to maintain its current interest rates at its upcoming meeting on July 30. However, market pricing indicates nearly 43 basis points of tightening by year-end, suggesting investors anticipate future rate hikes despite the immediate consensus for no change. The previous month's CPI data showed the Bank of England met expectations by keeping its forecast at 2%.
In currency markets, the pound has shown strength, climbing to approximately $1.35 against the dollar, its highest level since the beginning of the year. It also firmed against the dollar to $1.3446 from Monday’s close of $1.3418 and against the euro, trading at 1.1767 compared to 1.1755 the previous day. This comes ahead of the CPI data release.
Separately, the FTSE 100 opened 22 points lower at 10,502 despite robust jobs data showing the UK unemployment rate fell to 4.9% in the three months to May, below the 5% forecast, and employment rose by 148,000. Falling oil prices, with Brent crude down 0.54% to $88.74 a barrel, weighed on energy stocks within the index, offsetting the positive labor market news. Public sector debt stood at 94.9% of GDP, and June's government borrowing was £16 billion, slightly below forecast.
