Latest data released by ONS - 14 July 2021

  • Prior +2.1%
  • Core CPI +2.3% vs +2.0% y/y expected
  • Prior +2.0%

Those are solid beats but the devil is in the details once again when viewing the inflation report, as ONS notes that:

Prices for food, second-hand cars, clothing and footwear, eating and drinking out, and motor fuel rose in 2021 but mostly fell in 2020, resulting in the largest upward contributions to the change in the CPIH 12-month inflation rate between May and June 2021.

Of note, transport prices (+0.8%) was the largest contributor to the 12-month inflation rate. Adding to that, base effects is also still at play so there is that to consider when viewing the figures above.

That said, in any case, this will still put pressure on the BOE to address the issue and perhaps consider a stronger policy step even if they may regard this as 'transitory'.

Cable up to session highs now of 1.3842 from 1.3824 going into the report. Price is moving above the 100-hour moving average @ 1.3835 but there is still key resistance further up at around 1.3898-10 to contend with.