UK Inflation Data Hits Double Digits! What Does It Mean for Bitcoin and Cryptocurrencies?

The cost of living in the UK rose 10.1% in July, marking the first example of double-digit inflation in a major post-COVID-19 economy, a new sign of price pressures spreading across the world, according to an official report released Wednesday.

latest data, cryptocurrency It could lead analysts to talk more about the economic debate because inflation has been known for many years as a concept that Bitcoin has argued against.

“High Inflation in the UK May Exacerbate Price Pressures Elsewhere”

John Silvia, former chief economist at Wells Fargo, who founded Dynamic Economic Strategy, said that high inflation in the UK could exacerbate price pressures elsewhere, including in the US:

“There is a conflict between the policy expectations of the Fed and the Bank of England.”

The Bank of England has increased interest rates six times this year. The 50 basis point increase in August was the largest since 1995. The bank could raise interest rates faster as inflation is expected to reach 13% this year, according to the bank’s own projections.

According to analysts, a faster rate hike by the Bank of England could increase demand for fixed-income investments in the UK, which in turn could boost demand for the British pound and strengthen its value in foreign exchange markets.

“Risk Assets Like Bitcoin May Come Under Pressure If FED Responds”

On the other hand, as the US dollar will weaken comparatively, US consumers may have to pay more for imports in dollar terms, which could increase domestic inflation.

If the Fed has to respond with more aggressive rate hikes, bitcoin Risky asset markets such as these will likely come under pressure.

Cryptoassets are seen as one of the riskiest asset classes, and Bitcoin investors have paid close attention to inflation dynamics since at least the beginning of 2020.

*Not investment advice.