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Headline CPI in the UK stands at 2.8% in July as expected. It printed 2.9% last month. The Retail Price Index (RPI) also came in as predicted and dropped from 3.3% to 3.1%. Core CPI fell short of predictions by dropping from 2.3% to 2%.

GBP/USD was pressured before the publication and traded just under 1.5450 but recovered immediately afterwards. It initially dropped as low as 1.5429 and reached 1.5460 within seconds. Choppy times.

The Producer Price indices came in within expectations: PPI Input stands at 1.1% (vs. 1.2% expected). PPI Output rose by 0.2% (vs. 0.3% predicted). The House Price Index (HPI) which is a relatively late figure given all the available data in the UK, rose by 3.1%, below 3.6% expected.

It seems that if these levels of inflation persist, the BOE can continue its current policy without any changes.

The British pound eventually reacted positively to the announcement of forward guidance by the Bank of England. As the highly anticipated move got out of the way, cable jumped above 1.55 and EUR/GBP also fell below 0.85.

However, new USD strength pushed GBPUSD lower.

1.5445 serves as weak support, and it is followed by 1.54. Resistance is at 1.55 and 1.5580. For more, see the GBPUSD forecast.