UK inflation falls to 2.6% in June as sterling weakens on oil concerns

Britain's annual consumer price inflation slowed to 2.6% in June from 2.8% in May, below the 2.7% Reuters poll forecast and the lowest reading since March 2025, helped by lower fuel costs, easing transport inflation and softer food price pressures. Sterling was little changed initially after the data but later fell to about $1.336, its weakest level in 10 days, as investors weighed persistent underlying inflation, higher oil prices and fresh fiscal support measures. Core inflation was 2.6%, services inflation 3.6% and monthly CPI rose 0.1%. Money markets continued to expect the Bank of England to hold rates at next week's meeting while pricing in almost two quarter-point increases by year-end, compared with earlier pricing of one fully priced hike and a roughly 56% chance of a second.