Sterling climbs as UK inflation hits 6-year high


LONDON: 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 per cent in November above economists’ average expectations in a Reuters poll for another 3.0 per cent rise.

Because that is more than a per centage point above the BoE’s 2 per cent 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 per cent on the day.

Against the euro, sterling hit the day’s high of 88.07 pence, up 0.1 per cent.

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 per cent.

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