Analysts at Scotiabank noted that the pound tumbled yesterday as the USD firmed broadly.
“PM May barely managed to push through her Brexit plans in parliament and has dropped sharply again this morning following weaker than expected inflation data – flat on the month in Jun versus +0.2% expected, for a 2.4% gain in the year (steady over the May reading but below expectations for a +2.6% print).”
“BoE rate hike expectations have slipped modestly but markets continue to price in a roughly 80% chance of a rate hike on Aug 2nd. That may help limit weakness in the pound in the short run but we do not exclude the risk of a drop back to 1.28/1.29 near-term as economic and Brexit uncertainties persist. Former minister Johnson may use a resignation speech in parliament to twist the knife in PM’s Brexit approach.”