European session review: GBP appreciates as UK’s inflation exceeds BoE’s target again
14.07.2021, 11:52

European session review: GBP appreciates as UK’s inflation exceeds BoE’s target again

TimeCountryEventPeriodPrevious valueForecastActual
06:00United KingdomProducer Price Index - Input (YoY) June10.4%10.8%9.1%
06:00United KingdomProducer Price Index - Input (MoM)June1.2%1.2%-0.1%
06:00United KingdomProducer Price Index - Output (MoM)June0.8%0.6%0.4%
06:00United KingdomProducer Price Index - Output (YoY) June4.4%4.8%4.3%
06:00United KingdomRetail Price Index, m/mJune0.3%0.3%0.7%
06:00United KingdomHICP ex EFAT, Y/YJune2% 2.3%
06:00United KingdomRetail prices, Y/YJune3.3%3.4%3.9%
06:00United KingdomHICP, Y/YJune2.1%2.2%2.5%
06:00United KingdomHICP, m/mJune0.6%0.2%0.5%
09:00EurozoneIndustrial Production (YoY)May39.4%22.2%20.5%
09:00EurozoneIndustrial production, (MoM)May0.6%-0.2%-1%


GBP rose against most of its major rivals in the European session on Wednesday as investors weighed the hotter-than-expected UK’s June inflation data, which exceeded the Bank of England's (BoE) 2%-inflation target for the second straight month.

The Office for National Statistics (ONS) reported Britain’s annual inflation rate jumped to 2.5% in June from 2.1% in May. The latest reading was above economists’ forecast of 2.2% and was the highest since August 2018. Prices for food, second-hand cars, clothing and footwear, eating and drinking out, and motor fuel rose last month as the economy bounced back from a slump, caused by COVID-19 lockdown restrictions. On a m/m basis, the British consumer prices rose 0.5%, decelerating slightly from +0.6% in May. Economists had expected a gain of 0.2% m/m.

The June CPI data revived questions about whether the BoE’s will keep its massive stimulus in place. The British central bank's policymakers projected in June that the inflation would exceed 3%, as the economy reopens, but the pickup further above its 2%-target would only be "for a temporary period". There are concerns that persistently high inflation could force the BoE to scale back its GBP875 billion government bond-buying program earlier than expected. The Bank’s outgoing chief economist Andy Haldane voted at the last two meetings to stop the program early.

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