BOE faces persistent inflationary risks Odds of UK rate cut recede The pound rose in European trade on Wednesday against a basket of major rivals, moving near two-week highs against the US dollar following hot UK inflation data in August.

The data showcases the mounting inflationary risks on the Bank of England policymakers before Thursday's policy meeting, which hurt the odds of a UK rate cut this week.

The Price

The GBP/USD pair rose 0.3% today to $1.3200, with a session-low at $1.3156.

The pair fell 0.45% on Tuesday on profit-taking away from two-week highs at $1.3230.

UK Inflation

Earlier government data showed UK consumer prices rose 2.2% y/y in August, same as July.

Core prices rose 3.6% y/y in August, accelerating from 3.3% in July.

Services inflation surged 5.6% in August, above estimates of 5.4%, and up from 5.2% in July.

UK Rates

Following the data, the odds of a UK interest rate cut in September fell from 37% to just 28%, with less than a 50% chance of a November rate cut.

BOE

The Bank of England is convening on Thursday to discuss latest developments, with most analysts expecting no changes to policies or interest rates.

BOE Governor Andrew Bailey said recently its too early to declare victory on inflation in the country, in turn dragging the odds of a September rate cut down.