UK inflation data for July came in lower than expected. Headline prices fell 0.2% m/m, leaving inflation at 2.2% over the year. Core prices rose 3.3% in the July year, versus 3.4% expected and 3.5% in June. Even sticky Services inflation eased a bit more than forecast—but remains elevated at 5.2% y/y, Scotiabank’s chief FX strategist Shaun Osborne notes.

Minor dips to the 1.28 area remain well-supported

“Markets are still pricing in less than 50% risk of a BoE rate cut in September but continue to anticipate 50bps of additional easing by year-end. That’s not much different from earlier in the week.”

“Sterling’s rebound from last week’s low has stumbled a little this morning but losses are not too significant from a technical perspective and may already be stabilizing. Broader trends in GBP/USD remain constructive following last week’s strong—bullish—reversal. Minor dips to the 1.28 area should remain well-supported.”