Sterling climbs as UK inflation hits 6-year high
December 13, 20171.5K views0 comments
Sterling climbed and British bond futures dipped on Tuesday after data showed UK inflation unexpectedly hit its highest level in nearly six years in November, putting pressure on the Bank of England to raise interest rates again next year.
Consumer price inflation hit an annual rate of 3.1 percent in November above economists’ average expectations in a Reuters poll for another 3.0 percent rise.
Because that is more than a percentage point above the BoE’s 2 percent target, Governor Mark Carney will have to write a letter to finance minister Philip Hammond to explain what the BoE is doing in response.
The pound climbed to the day’s high $1.3380 after the data, up from $1.3335 beforehand, leaving it up a third of a percent on the day.
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Against the euro, sterling hit the day’s high of 88.07 pence, up 0.1 percent.
British government bond futures fell 10 ticks to hit a day’s low at 124.78.
Britain’s internationally exposed FTSE dipped slightly as the pound rose after the inflation data. It trimmed its earlier gains but remained positive, last trading up 0.1 percent.