Mark your calendars for Wednesday, July 19. At 07:00 UK time, markets may well witness a significant event that could have a notable impact on the GBP – the release of the UK inflation data. Investors, analysts, and traders will be eagerly awaiting this report to gauge the country’s progress in tackling the persistent challenge of soaring inflation.

According to expectations, the headline UK inflation figure is projected to decline from its previous level of 8.7% to 8.2% year-on-year. You can see that the prior UK inflation print held steady at 8.7% for both April and May’s print, so investors are looking for some signs of relief.

However, the core inflation reading, which excludes volatile elements, is anticipated to hold steady at a worrisome 7.1% year-on-year. This core figure remains three times higher than the Bank of England’s target inflation rate of 2%, indicating that there is still much work to be done in curbing price pressures. Below you can see that UK inflation data is heading in the wrong direction.

The implications of this inflation data release go beyond mere numbers on a chart. The performance of the British pound is likely to be heavily influenced by the outcome. If the core inflation reading falls below economists’ minimum projection of 6.6% year-on-year, brace yourself for a potential rapid sell-off of the GBP. The GBPJPY pair, in particular, is expected to experience heightened volatility during the release, making it a key focal point.

On the flip side, it’s essential to be aware that a high inflation reading can also have detrimental effects on the GBP. As concerns of stagflation – a combination of stagnant economic growth and rising prices – loom larger, the GBP may face downward pressure from that quarter too. The persistence and increasing severity of UK inflation could amplify worries about the country’s economic health, potentially leading to a decline in the GBP’s value.

As this crucial inflation update unfolds, we’ll witness the market’s reaction and the subsequent ripple effects across various asset classes. The ongoing battle against inflation in the UK is heating up, and its outcome will have implications for the GBP. Keep a close eye on how the GBP responds to this data release, as it will undoubtedly play a pivotal role in shaping market sentiment and investment decisions in the days to come.

So, mark your calendars, stay informed, and get ready for potential market turbulence as the UK reveals its latest inflation figures. The fight against rising prices continues, and its outcome will significantly impact the financial landscape. Release early Wednesday UK time at 07:00 UK time.