GBP/USD struggles near multi-month lows, around 1.2400 mark post-UK CPI

  • The latest UK consumer inflation figures match consensus estimates.
  • Brexit uncertainty remained a key overhang and seemed to cap gains.
  • Sliding US bond yields weigh on the USD and might help limit losses.

The GBP/USD pair quickly reversed an early European session dip to fresh 27-month lows, albeit struggled to extend the recovery post-UK CPI.

Data released this Wednesday showed that the UK headline CPI remained flat in June, with the yearly rate holding steady at 2.0% and the core reading edging up to 1.8% as compared to 1.7% previous.

In absence of any big divergence from consensus estimates, the data failed to provide any meaningful impetus and investors still seemed reluctant to buy the British Pound amid persistent Brexit uncertainty.

It is worth recalling that the UK PM candidates – Boris Johnson and Jeremy Hunt, both declaring the Irish backstop to be “dead” and adding that they will take it away from any future negotiation with the EU. 

On the other hand, a subdued US Dollar demand, capped by a fresh leg of a downfall in the US Treasury bond yields, extended some support and might turn out to be the only factor helping limit deeper losses.

With Wednesday’s key UK macro data out of the way, traders now look forward to the US housing market data – building permits and housing starts, for some impetus later during the early North-American session.

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