Bank of England (BoE) Governor Andrew Bailey said on Tuesday that inflation will come down, but it will take longer than expected. He mentioned that the central bank has incorporated more inflation persistence into its models.

Regarding labor market data, Bailey noted that the UK market is very tight and recovering slowly. He made these comments while speaking before the House of Lords Economic Affairs Committee. He also stated that banks in the UK are safe and robust.

Market reaction:

After lagging on Monday, the Pound is outperforming on Tuesday. GBP/USD is trading at the highest level in four weeks above 1.2600, and EUR/GBP is at 0.8565 after being above 0.8600 earlier in the day.