GBP/CHF mostly flat as UK CPI inflation steadies, BoE ahead

The GBP/CHF currency pair was mostly flat during early European session on Wednesday, after data showed annual headline inflation in the UK remained stable in August and ahead of the outcome of the Bank of England’s policy meeting.

Annual inflation rate in the UK remained steady at 2.2% in August, data by the Office for National Statistics showed, in line with market consensus.

The biggest upward pressure came from air fares, which rose 11.9% YoY, and cost of recreation and culture, up 4% YoY.

Also, services inflation, which is closely monitored by the Bank of England, picked up to 5.6% in August from 5.2% in July.

The BoE had projected annual inflation rate of 2.4% in August before an acceleration to around 2.75% by year-end.

UK’s annual core CPI inflation, which excludes volatile categories such as food and energy, accelerated to 3.6% in August, the highest rate since April, from 3.3% in July.

The Bank of England is expected to keep its benchmark interest rate without change at 5% at its September policy meeting.

The BoE cut its bank rate by 25 basis points to 5% in August, but said it would move cautiously in easing monetary policy further until the Monetary Policy Council was more certain that inflation would remain subdued.

August’s decision was “finely balanced”, as four MPC members opted to keep borrowing costs on hold.

In the meantime, CHF traders will be also paying attention to Swiss trade data for August due out on Thursday.

As of 7:04 GMT on Wednesday the GBP/CHF currency pair was inching down 0.02% to trade at 1.1142.