BRUSSELS (dpa-AFX) - The British pound strengthened against other major currencies in the early European session on Wednesday, after U.K. consumer price inflation accelerated unexpectedly in June to the highest since January 2024 largely due to higher transport and food costs but the Bank of England is expected to loosen its policy further, given mounting concerns over economic conditions.
Data from the Office for National Statistics showed that the consumer price index advanced 3.6 percent year-on-year in June, faster than the 3.4 percent rise in May. Prices were expected to climb again by 3.4 percent in June.
The 3.6 percent inflation was the highest since January 2024. Moreover, it remains well above the Bank of England's 2 percent target.
Core inflation that excludes prices of energy, food, alcohol, and tobacco rose to 3.7 percent from 3.5 percent a month ago.
On a monthly basis, consumer prices rose 0.3 percent, slightly faster than the 0.2 percent increase in May.
In June, the BoE had left its interest rate unchanged at 4.25 percent. The bank had reduced the rate four times since last August.
Meanwhile, the investors became cautious after the U.S. President Donald Trump announced a 19 percent tariff on Indonesian exports under a new bilateral pact.
Indonesia has scrapped tariffs on U.S. goods and pledged billions in purchases to maintain access to its second-largest export market, it was said.
Analysts said the deal is heavily skewed in favor of the U.S., requiring significant trade-offs.
The 19 percent tariff is just below Vietnam's 20 percent and Bangladesh's 35 percent, two key rivals in major export sectors such as textiles, footwear and apparel.
In the European trading today, the pound rose to a 1-week high of 199.74 against the yen and a 2-day high of 1.0749 against the Swiss franc, from early lows of 199.08 and 1.0728, respectively. If the pound extends its uptrend, it is likely to find resistance around 201.00 against the yen and 1.08 against the franc.
Against the U.S. dollar and the euro, the pound edged up to 1.3417 and 0.8663 from early lows of 1.3383 and 0.8682, respectively. The pound may test resistance around 1.35 against the greenback and 0.84 against the euro.
Looking ahead, U.S. MBA mortgage approvals data, U.S. PPI data for June, U.S. industrial and manufacturing productions data for June, U.S. EIA crude oil data and Canada housing starts data for June are slated for release in the New York session.
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