UK Inflation at 2.6% Sends Pound Lower Against Euro

The pound slipped against the euro Wednesday after UK inflation cooled to 2.6% in June, the Office for National Statistics said. The reading fell from 2.8% in May and came in below the consensus estimate. GBP/EUR traded at €1.1729 in late afternoon London, down 0.2% on the session.

The softer print reinforced the view that the Bank of England will keep its benchmark rate at 5.0% through the summer. Swaps pricing now assigns a roughly 20% chance of a quarter-point hike at the August meeting, down from nearly 50% a month ago. The euro held ground against the dollar, leaving the single currency firmer against sterling. The European Central Bank is also expected to hold rates unchanged at its July decision next week.

GBP/EUR closed near €1.1729, its weakest since early June.