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Pound climbs as hopes of September rate cut ‘extinguished’ by inflation reading - YAHOO FINANCE
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The pound moved higher on Wednesday morning after stronger-than-expected inflation effectively ruled out the chances of a September interest rate cut.
Sterling was higher against the dollar, up 0.1% at $1.3495, and by the same margin against the euro at €1.1589.
Consumer Prices Index (CPI) inflation increased to 3.8% in July from 3.6% in June, the Office for National Statistics (ONS) said. Most economists had been forecasting a rise to 3.7%.
Suren Thiru, economics director at ICAEW, said: “July’s outturn probably extinguishes hope of a September interest rate cut, while strengthening underlying inflationary pressures call into question whether policymakers will be able to relax policy again this year.”
Financial markets see a less than 5% chance of a reduction in borrowing costs after the inflation data..
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was muted 0.2% to 98.28 on Tuesday.
