GBP/USD Stalls Amid Ongoing UK Inflation Concerns Ahead of Fed Decision

The GBP/USD exchange rate remained unchanged despite the release of UK inflation data that showed prices rose to 3.1% year on year in August, the highest since March.

The increase was driven by higher petrol costs amid the ongoing war in Iran and rising airfares, while service sector inflation remained at 3.4% and core inflation stayed at 2.6%.

Expectations surrounding Bank of England rate hikes remain unchanged, with four rate hikes expected across the coming 12 months despite a weak labour market helping to contain price pressures.

The BoE meets this week and is expected to leave rates unchanged, but Governor Andrew Bailey warned that new risks are emerging, including rising food prices from challenging domestic weather and the impact of Super El Niño.