The British pound rose above $1.34 after UK inflation came in hotter than expected in June. Headline inflation hit 3.6%, above the 3.4% forecast and up from May’s figure. This led traders to scale back expectations for Bank of England (BoE) rate cuts. Markets now price in an 80% chance of a 25 basis point cut in August, with just one more cut likely by year-end. While inflation remains well above the BoE’s 2% target, analysts note that much of the recent rise is due to energy price cap changes, which may fade in coming months. Attention is now shifting to the UK labor market, which policymakers see as more crucial. Recent BoE speeches have emphasized job market weakness over temporary inflation spikes, suggesting that upcoming jobs and wage data will be more influential for future rate decisions.