UK Inflation Decreases to Lift GBP

London: 16 August 2023 (TraderMade): The inflation rate has been a crucial economic factor influencing exchange rates. The UK inflation rate announced today impacts the Pound Sterling exchange rates. Let us reveal how the latest inflation rate helps Sterling move higher.

The Consumer Price Inflation in the United Kingdom dropped to 6.8% in July, compared to 7.9% in June. This is the lowest inflation rate since February 2022. The lowering of energy costs has been the significant reason behind this decline.

The core inflation (excluding fuel and food prices) stood at 6.9%. It is the same as in June. However, these figures are way beyond the Bank of England's target inflation rate of 2%.

Though the inflation rate dropped, it is still higher. So, economists anticipate that the BoE may continue a tightening monetary policy. Experts expect the interest rates to touch 5.5% (from the current 5.25%) in September.

##The current status of GBP exchange rates Look at the Pound Sterling to US Dollar (GBPUSD) pair. It was trading at 1.31 on 16 July. As of 16 August, it has dropped to 1.29.

Similarly, the Euro to Pound Sterling (EURGBP) pair was at 0.87 on 10 August. As of 16 August, it is at 0.86.

These latest figures indicate that the Pound Sterling is strengthening against other major currencies.

You can stay updated with the Forex market movements by following the live rates for Euro to Pound Sterling and Pound Sterling to US Dollars.