Pound Surges Amid Middle East Tensions and UK Inflation Insights
The pound rose slightly as tensions in the Middle East affected the dollar, and UK inflation data showed minimal movement, decreasing the likelihood of imminent rate cuts. Consumer prices grew by 3.4% in May, aided by this stability, despite food prices spiking. Analysts anticipate no immediate rate cuts from the Bank of England.
The British pound showed resilience on Wednesday, gaining ground against the dollar amid geopolitical tensions in the Middle East. The instability in the region has elevated investor anxiety, driving flows toward the U.S. currency as a safe haven.
Concurrently, fresh UK inflation data revealed a modest annual increase of 3.4% in consumer prices for May, slightly decreasing from April's rate. This decrease was influenced by falling airfares and correction of tax errors, although food prices surged significantly.
Monetary policy considerations shifted focus as the Bank of England evaluated its stance on rate cuts. While service sector inflation cooled to 4.7% from 5.4%, aligning with forecasts, the expectation persists that rate cuts remain unlikely in the immediate months.
(With inputs from agencies.)
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