GBP/USD: Sterling Pops Above $1.34 After UK Inflation in June Hits 3.6%, Topping Estimates

Analysts were eyeballing 3.4% for the month but the recent uptick complicates the Bank of England’s path toward lower interest rates.

🔥 On Track to Crack Losing Streak

• The GBPUSD pair popped above $1.34 on Wednesday, climbing to a session high of $1.3420 from an opening of $1.3380, as traders digested a surprise rise in UK inflation. The move puts the exchange rate on track to break a four-day losing streak after breaking below its 50-day SMA support.
• According to the Office for National Statistics, the UK’s annual inflation rate rose to 3.6% in June, topping expectations for a milder 3.4% and marking an uptick from May’s 3.4% print.
• The jump complicates the Bank of England’s path to easing rates, as policymakers had been signaling that falling inflation would clear the way for another cut as early as this summer. Well, that projection might not be there the next time officials meet.

🧾 Core Prices Add to the Pressure

• June’s core inflation, which strips out volatile items like food and energy, rose to 3.7% year-over-year, up from 3.5% in May — a sign that underlying price pressures might be stickier than expected.
• ONS acting chief economist Richard Heys said the surprise bump was driven mainly by motor fuel prices, which didn’t drop as sharply as they did in the same period last year.
• The data comes just weeks before the BoE’s next policy meeting, where traders had been betting on another 25bps cut — but markets are now reconsidering how fast the central bank can pivot without stoking even higher inflation risks.

👀 Tariffs, Rates, and Pound Moves

• The CPI print lands just as forex bros brace for the Fed’s next moves — with US inflation surprising to the upside this week too.
• Meanwhile, the pound remains vulnerable to shifts in global risk appetite, as Trump’s August 1 tariff deadline on dozens of countries, including the EU, threatens to weigh on broader market sentiment.
• Presently, the pound’s bounce above $1.34 suggests buyers see value after the recent slide — but whether it sticks depends on fresh macro headlines and what the BoE signals next.