Pound Lower after CPI Misses Forecasts

The Pound Sterling retreated and recorded a 1-week trough today after the release of inflation data which missed analysts' forecasts. That news further rocked market sentiment as many FX traders see the chances for an August rate hike from the Bank of England continuing to fade. The UK's National Statistics Office reported May inflation at 2.4% annualized, matching the lowest level in more than 14 months; economists had been predicting that CPI would hit 2.5%. Markets are still hopeful that there will be at least one rate hike this year, though the likelihood it will be in August is now at about 43%.

As reported at 10:53 am (BST) in London, the GBP/USD was trading at $1.3341, down 0.24%; the pair has ranged from a session low of $1.3309 while the high is set at $1.3375. The EUR/GBP is trading at 0.88185 Pence, a gain of 0.39430%; the pair has ranged from 0.87806 Pence to 0.88234 Pence

Markets to Look to Fed

Markets will turn their attention later today to the United States with some producer price inflation data being released; analysts are predicting that May's figures will be flat from the previous periods, both on an annualized and a monthly basis. Then the Federal Reserve Bank will announce its policy decision. Economists have predicted a 25 basis points rate hike to be pushed through, bringing the Prime Rate to 2% from the current 1.75%.

Barbara Zigah is a freelance journalist living in Ghana, who specializes in Forex-related content; her online work has appeared in the IB Times, NASDAQ, Benzinga, and Seeking Alpha.