FX.co ★ Pound Steady as Hotter UK Inflation Tempers BoE Rate-Cut Hopes

The British pound remained relatively stable at $1.344, maintaining its position above the recent four-week low of approximately $1.338, reached on January 15. This stability comes on the heels of new data indicating that UK inflation accelerated beyond expectations in December, thereby dampening the prospects of additional interest rate reductions by the Bank of England. The annual inflation rate increased to 3.4%, rising from November's eight-month low of 3.2% and surpassing market projections of 3.3%. Core inflation remained steady at 3.2%, aligning with predictions, while service inflation, an important indicator monitored by the Bank of England for domestic price pressures, slightly increased to 4.5% from 4.4%, a rise smaller than anticipated. This data follows a labor market report revealing that the unemployment rate held steady at a pandemic-era high of 5.1%. In addition, the US dollar continues to face pressure due to heightened tensions between the US and Europe, magnified by President Donald Trump's intensifying threats concerning Greenland, which have diminished confidence in US assets.