Breaking: UK annualized inflation rises by 9.1% in May vs. 9.1% expected

UK CPI rises by 9.1% YoY in May vs. 9.1% expected.
Monthly UK CPI arrives at 0.7% in May vs. 0.6% expected.
GBP/USD drops to daily lows at 1.2217 on mixed UK CPIs.

FXStreet Team FXStreet

The UK Consumer Prices Index (CPI) 12-month rate came in at 9.1% in May when compared to 9.0% registered in April while matching estimates of a 9.1% print, the UK Office for National Statistics (ONS) reported on Wednesday.

The annualized figure hit the highest since March 1982 and is also the highest rate out of the Group of Seven (G7) countries.

Meanwhile, the core inflation gauge (excluding volatile food and energy items) eased to 5.9% YoY last month versus 6.2% booked in April, missing the market forecast of 6.0%.

The monthly figures showed that the UK consumer prices arrived at 0.7% in May vs. 0.6% expectations and 2.5% previous.

FX implications:

In an initial reaction to the mixed UK CPI numbers, the GBP/USD pair fell further to hit a daily low at 1.2217.

The pair was last seen trading at 1.2233, down 0.32% on the day. US dollar rebounds amid broad risk-aversion.

Why UK inflation matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

Author

FXStreet Team

FXStreet

EUR/USD keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

AI Crypto Update: Bittensor eyes breakout as AI tokens falter

The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.