According to Jinshi Data, Monex analyst Nick Rees said in a report that UK inflation data made the prospect of the Bank of England cutting interest rates in August "more doubtful". The pound therefore extended its earlier gains, rising to a one-year high above 1.30 against the dollar and a two-year high against the euro.
A rate cut next month may be hard to swallow given that progress in the decline in headline inflation appears to have stalled this month. Annual UK inflation remained at 2% in June, contrary to expectations for a small decline, and core and services inflation remain elevated.
