UK inflation rose to 3.6%, exceeding economist expectations of 3.4%. Core inflation remained at 4.7%, defying predictions of a drop to 4.6%. The Bank of England projected inflation to peak at 3.7% in September, nearly double its 2% target. Higher transport costs, especially motor fuel, were the main driver of the increase. Governor Andrew Bailey expects inflation to decrease slowly due to a weaker pound impacting wage growth. Chancellor Rachel Reeves aims to reduce red tape to boost the economy. Traders reduced bets on BoE easing after the inflation release. The British Pound initially rose post-data.

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