UK Inflation Holds Steady, BoJ Bets Boost JPY

The UK's headline inflation rate for July has come in at 2.9% year-on-year, as expected, while core CPI remained steady at 2.6% YoY.

The slight increase in headline inflation sparked a mild reaction from the British Pound against the Japanese Yen, with the GBP reaching its day's low near 215.70 after the data release.

TD Securities expects UK wages to ease, with average weekly earnings growth dropping to 4.0% 3m/y from May's 4.3%, due in part to the expiration of March's outsized bonus figures.

Meanwhile, hawkish bets on the Bank of Japan have helped the Japanese Yen stage a strong recovery, outperforming its major currency peers and leading investors to expect a 25 basis point interest rate hike in September.