Today's UK CPI came in below market expectations, but views spread that it was insufficient to encourage the BoE to raise rates, leaving the pound's movement limited for the time being.
In today's foreign exchange market, the pound rose into the $1.36 range as the dollar weakened. It broke above its July high during the day, with the area around May's year-to-date high seen as a potential upside target.
Meanwhile, sterling fell temporarily into the ¥214 range in tandem with the decline in USD/JPY, but was bought back to the mid-¥215 range. With the 100-day moving average providing support, the post-intervention rebound market remains intact.
Although the UK CPI released today for July came in below market expectations, the month-on-month increase accelerated. Analysts said that UK inflation had risen but was insufficient to encourage the BoE to raise rates, and viewed the impact on the pound as limited for the time being.
There is a view that the perception that the BoE is likely to refrain from raising rates will not weigh on the pound until closer to year-end. Some also point out that, in a low-volatility environment, the pound's high interest rates provide relative support through carry trades.