GBP rose against most of its major rivals in the European session on Wednesday as investors weighed the hotter-than-expected UK’s June inflation data, which exceeded the Bank of England's (BoE) 2%-inflation target for the second straight month.

The Office for National Statistics (ONS) reported Britain’s annual inflation rate jumped to 2.5% in June from 2.1% in May. The latest reading was above economists’ forecast of 2.2% and was the highest since August 2018. Prices for food, second-hand cars, clothing and footwear, eating and drinking out, and motor fuel rose last month as the economy bounced back from a slump, caused by COVID-19 lockdown restrictions. On a m/m basis, the British consumer prices rose 0.5%, decelerating slightly from +0.6% in May. Economists had expected a gain of 0.2% m/m.

The June CPI data revived questions about whether the BoE’s will keep its massive stimulus in place. The British central bank's policymakers projected in June that the inflation would exceed 3%, as the economy reopens, but the pickup further above its 2%-target would only be "for a temporary period". There are concerns that persistently high inflation could force the BoE to scale back its GBP875 billion government bond-buying program earlier than expected. The Bank’s outgoing chief economist Andy Haldane voted at the last two meetings to stop the program early.