GBP/USD Surges to Three-Month High on UK Inflation Data

The GBP/USD pair reached its strongest level in more than three months after the UK's inflation rate hit 2.9% in July, up from 2.6% in June.

The data showed that housing and household services contributed the largest upward push to inflation, jumping to 4.1% from 2.7% in June due to a 13% hike in Ofgem's household energy price cap.

This increase was almost entirely explained by the energy shock, with softer food and motor-fuel inflation offsetting part of that boost.

Cable remains trapped below the 1.3570 resistance area, but the Office for National Statistics reported that core CPI held at 2.6% against expectations for a downtick to 2.5%, which reads hawkish, while services fell to 3.4% and input PPI dropped 1.7%, which reads dovish.

The market had already positioned for this data, but it tells us what happens at 2:00 p.m. ET when the Fed minutes arrive, which could strengthen or weaken expectations for a Bank of England rate hike in December.