GBP/USD oscillates below 1.1500 ahead of UK Inflation

The GBP/USD pair is displaying back-and-forth moves below the psychological support of 1.1500 from the late New York session. The pair witnessed an intense sell-off after the release of the US Consumer Price Index (CPI) data. Risk-perceived currencies nosedived after higher-than-expected US inflation data. The headline CPI landed at 8.3%, higher than the expectations of 8.1% but remained lower than the prior release of 8.5%.

On an increment in US inflation data, investors infused an adrenaline rush into the US dollar index (DXY). The mighty DXY rallied vigorously towards the psychological resistance of 110.00 from a low of 107.69. The market participants channelized liquidity into the DXY as the market mood soured on soaring odds for a bumper rate hike by the Federal Reserve (Fed) in its September monetary policy meeting.

Investors were expecting that the Fed will trim the pace of hiking interest rates but now higher-than-expected inflation data is hinting at a third consecutive 75 basis points (bps) rate hike announcement. Also, the core CPI that excludes oil and food prices increased significantly to 6.3% against the expectations of 6.1% and the prior release of 5.9%, which is mainly responsible for DXY’s juggernaut rally.

On the UK front, investors are awaiting the release of the UK inflation data. The economic data is seen higher at 10.2% vs. 10.1% reported earlier on an annual basis. Also, the core CPI is seen higher at 6.3% vs. 6.2% for June. A higher-than-expected release of the inflation rate will accelerate troubles for the Bank of England (BOE) as inflationary pressures along with soaring jobless claims will restrict the BOE to announce interest rate hikes unhesitatingly. The economy reported an increase in the number of jobless benefits by 6.3k.