The United Kingdom’s Consumer Price Index (CPI) rose 3.0% year-on-year in February, unchanged from January, according to data released by the Office for National Statistics (ONS) on Wednesday. The figure came in line with market expectations and remains above the Bank of England’s 2.0% target.
Core inflation, which excludes food and energy, increased to 3.2% annually, slightly higher than January’s 3.1% and above the forecast of 3.1%. On a monthly basis, CPI rose 0.4% in February, recovering from a 0.5% drop in January and meeting market estimates.
Following the data release, the British Pound saw some buying interest. However, GBP/USD was still down 0.14% on the day, trading around 1.3390 at the time of writing.
The inflation report is closely watched by markets as it plays a key role in shaping the Bank of England’s policy decisions. After keeping interest rates unchanged at 3.75% in its March 19 meeting, the central bank signaled a more cautious stance, with concerns over rising energy costs and persistent inflation pressures.
Looking ahead, inflation is expected to stay near 3% in the second quarter and could rise toward 3.5% later in the year. This has led investors to anticipate further rate hikes, with markets pricing in more than 67 basis points of tightening in 2026 and a possible 25 basis point increase at the next meeting.
Bank of England Governor Andrew Bailey warned that rising fuel and energy costs could continue to push inflation higher, while also noting that weaker economic growth may help ease price pressures over time.
From a technical view, GBP/USD is facing resistance after hitting yearly lows near 1.3200. Further downside could lead to a move toward 1.3010. On the upside, resistance levels are seen around 1.3495, followed by 1.3574 and 1.3868.
Momentum indicators remain weak, with the Relative Strength Index (RSI) below 47 and the Average Directional Index (ADX) near 30, suggesting the current trend is still strong but leaning bearish.
