UK July CPI has come in at unchanged m/m, +1.8% y/y, stronger than the median forecasts of -0.3% and +1.5% respectively. Something of a surprise. Cable has rallied strongly on the news, presently at 1.6445 having briefly touched a session high 1.6455. I’m a little surprised by the extent of the rally to be honest.
The chief upward impact on CPI came from the recreation and culture secotr, specifically the prices of computer games, DVDs and CDs. There was also upward pressure from furniture prices because of less aggressive discounting in the July sales.