The UK Consumer Prices Index (CPI) 12-month rate came in at +1.0% in July when compared to +0.6% booked in June while beating expectations of a +0.6% print, the UK Office for National Statistics (ONS) reported on Wednesday. Meanwhile, the core inflation gauge (excluding volatile food and energy items) arrived at +1.8% YoY last month versus +1.4% booked in June while beating the consensus forecast of +1.3%.

As per the ONS, “The largest contribution to the CPIH 12-month inflation rate in July 2020 came from recreation and culture (0.33 percentage points).

Clothing, rising prices at the petrol pump, and furniture and household goods made large upward contributions to the change in the CPIH 12-month inflation rate between June and July 2020. Falling food prices resulted in a partially offsetting small downward contribution to the change.”

U.K. and European Union officials have the next seven weeks to find something that has eluded them since March an agreement over their future relationship. Britain and the bloc want to reach an agreement before the negotiations are scheduled to conclude Oct. 2 — but, so far, neither has made adequate concessions for the other. Each is waiting for the other to blink first, according to officials in both camps. Given that, there is little prospect of a breakthrough this week, said one EU official, who spoke on condition of anonymity because the talks are held in private.

On the Other hand, Experts are again sounding the alarm that the dollar could lose its role as the world’s reserve currency. This is a frequent and historically unconsummated concern — but things may actually be different this time. As new data from the Bank of Russia show the country now receives more euros than dollars for its exports to China, with the share of goods purchased in euro’s rising from 0.3% at the start of 2014 (and just 1.3% in the second quarter of 2018) to nearly 51% at the end of Q1 this year. The share of euro’s Russia receives for exports to the European Union increased to 43% from 38% at the end of last year, the data show.

GBP/USD 4 Hour Chart:

Support: 1.3137 (S1), 1.3038 (S2), 1.2982 (S3).

Resistance: 1.3293 (R1), 1.3349 (R2), 1.3449 (R3).

All the catalysts strengthens Sterling against the weakening greenback. We expect a bullish trend for GBP/USD.