Sterling climbs as UK inflation beats expectations


LONDON: Sterling briefly climbed to its highest so far this week on Tuesday after data showed British inflation unexpectedly stayed close to its highest levels in six years in January.

Consumer price inflation held at an annual rate of 3.0 per cent, unchanged from the month before, after reaching its highest since March 2012 in November at 3.1 per cent, the Office for National Statistics said.

The historic measure of retail price inflation, which is still used to calculate payments on government bonds, student loans and many commercial contracts, edged down to 4.0 per cent from December’s six-year high of 4.1 per cent.

Sterling initially jumped after the data, hitting $1.3924 , up from $1.3886 beforehand. It was trading at $1.3873 by 0943 GMT, still up 0.3 per cent on the day but below where it was trading before the inflation numbers.

“It (the data) has not exactly blown the doors off,” said Mizuho’s head of hedge fund FX sales, Neil Jones.

“Some people were thinking the annual figure could actually come in above the 3 per cent level, which is one of the reasons Cable (sterling/dollar) was catching a bid this morning, so maybe there was some disappointment relative to expectations.”

British government prices fell and yields rose. March gilt futures were down about 20 ticks compared with their level before the inflation data was published, while German bund futures were up.

Britain’s FTSE 100 turned slightly negative after sterling rose, last trading 0.1 per cent lower.

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