UK Inflation Set to Rebound, Boosting Rate Hike Bets

The UK's Office for National Statistics will release the July Consumer Price Index (CPI) data, which is expected to show annual headline inflation rebounding to a four-month high of 2.9% year-over-year.

This would surpass the Bank of England's forecast of 2.8%, moving further away from its 2% target.

The report could significantly affect market expectations for a September interest-rate hike by the BoE, which would stir volatility in the British Pound (GBP) as traders assess the impact of energy price swings driven by the Middle East war.

According to TD Securities, several components are now posing upside risks to the UK's disinflation narrative, including food prices and airfare inflation.