Pound Holds Firm as UK Inflation Data Meets Expectations

The British pound held its ground against the dollar on Wednesday after UK inflation data for July matched market expectations.

Annual consumer price inflation rose to 2.9% in July from a 15-month low of 2.6% in June, according to the latest figures.

Economists polled by Reuters had widely expected a 2.9% increase, although the Bank of England predicted a smaller rise to 2.8% in forecasts published at the end of last month.

Ruth Gregory, deputy chief UK economist at Capital Economics, said 'domestically generated inflation remains contained'. She added that CPI inflation will fall to 2.0% by the end of next year, provided energy prices don't rise much further.