GBP/USD surges as UK inflation exceeds forecasts, dampening BOE cut hopes

GBP/USD jumped 0.4% to 1.2980 following stronger-than-expected UK inflation data that reduced expectations for Bank of England rate cuts. June CPI accelerated to 3.6% year-over-year, surpassing the 3.4% forecast and previous reading. Core CPI also surprised higher at 3.7% versus 3.5% expected, while services inflation remained sticky at 4.7%, above the 4.6% consensus. The data significantly exceeds even the highest analyst forecasts, with core CPI matching the most bullish prediction. Markets had priced in 53 basis points of BOE easing through year-end before the release, but August cut probability has now diminished considerably. While two rate cuts remain possible across the three meetings following August, the persistently high inflation readings suggest the BOE may need to maintain its hawkish stance longer than anticipated. Sterling found immediate support at 1.2920 with resistance emerging near 1.3000 psychological level.